Gross Pay

What is gross pay?

Gross pay is an employee's total earnings before any deductions. It includes regular wages, overtime, bonuses, commissions, and other compensation. Gross pay appears at the top of pay stubs and forms the starting point for calculating taxes and other withholdings. The difference between gross pay and what the employee takes home often surprises new workers.

Components of gross pay

Regular hours times hourly rate gives base pay for hourly employees. Overtime hours typically pay at 1.5 times the regular rate. Salary employees receive their periodic salary amount. Add bonuses, commissions, tips, and other compensation to reach total gross pay. Each component may have different tax treatment, but all count toward gross.

Gross pay vs taxable wages

Gross pay and taxable wages often differ. Pre-tax deductions like 401k contributions and health insurance premiums reduce taxable wages below gross pay. Certain benefits may be included in gross pay for some tax purposes but not others. Your payroll system calculates these differences, but understanding them helps you answer employee questions.