What is Gross Pay?
Gross pay is the amount that an employee receives before taxes.
Gross pay includes the employee’s base pay, all allowances, such as for health insurance, and commissions.
Gross pay is subject to taxes and is the amount that is actually received by the employee. Net pay is gross pay minus taxes. Employers usually withhold taxes from gross pay, but employees must pay their taxes directly to the IRS.
Gross pay is necessary because it is used to calculate an employee's net pay. Net pay is the amount of money that an employee takes home after taxes and other deductions are taken out. An employee's net pay is what is used to calculate their take-home pay.