What is a net salary?

Net salary, also known as take-home pay, is the amount of a person's gross income that remains after all payroll taxes and deductions are removed by the employer. It is called take-home pay because it is the actual amount of the paycheck or direct deposit.

Typical amounts removed from gross pay include federal and state income tax withholdings, retirement contributions, Social Security taxes, Medicare taxes and insurance premiums paid pre-tax by the employee. Typical employee pay stubs show how much is deducted to determine the final net salary. Workers also receive W-2 statements at the end of the year that indicate gross pay, amounts for different deductions and net pay.