Lesson 1 of 10
Gross pay vs. net pay: what's the difference?
Gross pay is what you earn.
Net pay is what you keep.
Net pay is also called take-home pay. It's the money that lands in your bank account.
The gap between them is taxes and deductions.
Example: $50,000 a year in Texas
Gross pay$50,000
Federal income tax−$3,820
Social Security−$3,100
Medicare−$725
Net pay (take-home)$42,355
That's about $3,530 a month. Single filer, 2026 rates, no other deductions. Texas has no state income tax.
Key idea
Always plan your life with net pay, not gross pay. Net pay is the money you can actually spend.
Try it: see your own take-home pay for any state.
Next: lesson 2How to read your pay stubSources: IRS 2026 tax rates