Net pay is the amount of money an employee receives in their paycheck after all deductions have been taken out from their gross pay. These deductions can include federal, state, and local taxes, Social Security and Medicare contributions, retirement plan contributions, health insurance premiums, and other voluntary or involuntary deductions (such as garnishments). Net pay is often referred to as “take-home pay” because it represents the actual amount an employee takes home after all withholdings are accounted for. It is typically lower than gross pay due to these deductions.
