If your job offer says $75,000 a year but your paychecks don’t add up to that, this is why.
The two numbers
Gross pay is what you’re paid before anything is taken out — the number in your offer letter or employment contract. If your salary is $75,000 a year, that’s your gross annual pay. (Paid hourly instead? See Why This Calculator Doesn’t Support Hourly Pay Yet for how to get to an annual number first.)
Net pay (also called take-home pay) is what actually lands in your bank account after taxes and deductions are subtracted. It’s always smaller than gross pay for anyone earning wages.
The formula
Gross pay
− Federal income tax
− FICA (Social Security + Medicare)
− State income tax (if applicable)
− Other deductions (401(k), health insurance, etc.)
= Net payEach of those subtractions is its own line on a typical pay stub — see How to Read Your Pay Stub for what each one means.
A concrete example
A single filer in Texas (no state income tax) earning $75,000 a year:
- Gross annual pay: $75,000
- Federal income tax: $7,670 (see 2026 Federal Tax Brackets)
- FICA: $5,737.50 (see FICA Tax Explained)
- State tax: $0 (Texas has no wage income tax)
- Net annual pay: $61,592.50
That’s about 82% of gross pay taking home — the exact percentage depends heavily on filing status, state, and income level, which is exactly why a single flat “expect to lose X%” rule of thumb doesn’t hold up well across different situations.
Why this trips people up
Job offers, salary negotiations, and most public salary data all use gross pay, since that’s the contractual number. Budgeting, on the other hand, only works off net pay — the amount that’s actually available to spend. Mixing the two up is one of the most common sources of “why is my paycheck smaller than I expected” surprise for anyone starting a new job. It also trips people up across pay schedules — see Biweekly vs. Semimonthly Pay for why the same annual salary produces a different-looking paycheck depending on how often you’re paid.
Plug your own numbers into the Paycheck Calculator to see exactly where the gap between gross and net comes from for your specific salary, filing status, and state.