Gross Pay — Payroll Definition
Your total earnings before any deductions — the "big number" on your paystub.
Your total earnings before any deductions — the "big number" on your paystub.
Gross pay is the total amount of money you earn before any taxes, insurance, retirement contributions, or other deductions are taken out. For hourly workers, it's calculated as: hours worked × hourly rate + overtime + bonuses. For salaried employees, it's your annual salary divided by the number of pay periods. Gross pay is always higher than your net (take-home) pay, and it is the figure every deduction on the stub is calculated from.
Example: 80 hours × $25/hr = $2,000 Gross Pay
The Gross Pay Formula
For an hourly employee, gross pay = (regular hours × hourly rate) + (overtime hours × 1.5 × hourly rate) + any bonuses, commissions, tips, or shift differentials paid in that period. For a salaried employee, gross pay = annual salary ÷ number of pay periods: 26 for biweekly, 24 for semi-monthly, 52 for weekly, and 12 for monthly. A $78,000 salary paid biweekly is $3,000.00 of gross pay per period. Gross pay is computed before a single deduction is applied, which is why it is the base for federal income tax, Social Security, Medicare, and percentage-based benefit deductions.
Gross Pay vs. Gross Income
Gross pay is an employment figure: the wages one employer owes you for one pay period, before deductions. Gross income is a tax figure: everything you received during the year from every source before taxes — wages from all jobs plus self-employment profit, interest, dividends, rental income, and other taxable receipts. If your only income is one salary, your annual gross pay and your gross income are the same number. Add a freelance client or a savings account and they diverge immediately. Compare the two on our gross income definition at /glossary/gross-income.
Where Gross Pay Appears on a Pay Stub
Gross pay sits at the top of the earnings block, usually with two columns: the current pay period and the year-to-date running total. Every earnings line above it — regular, overtime, bonus, commission, holiday, PTO — sums to that figure, and every tax and deduction below it subtracts from it down to net pay. One caution when you compare a stub to a W-2: annual gross pay rarely equals Box 1, because pre-tax deductions such as 401(k), medical premiums, HSA, and FSA reduce the taxable wages reported there.
Frequently Asked Questions
- Is gross pay before or after taxes?
- Before. Gross pay is your total earnings for the pay period with nothing subtracted yet — no federal or state income tax, no Social Security or Medicare, no insurance premiums, and no retirement contributions. The amount left after all of those come out is your net pay.
- What is the gross pay formula?
- For hourly work: gross pay = (regular hours × hourly rate) + (overtime hours × 1.5 × hourly rate) + bonuses, commissions, and tips. For salary: gross pay = annual salary ÷ pay periods per year (26 biweekly, 24 semi-monthly, 52 weekly, 12 monthly).
- Does gross pay include overtime?
- Yes. Gross pay includes every dollar earned in the period, so overtime at 1.5 times the regular rate, double time, shift differentials, bonuses, commissions, and tips all roll into it. Each usually appears on its own earnings line before the gross pay total.
- Is gross pay the same as gross income?
- No. Gross pay is the wages one employer pays you before deductions. Gross income is your total income from all sources before taxes, including wages, self-employment earnings, interest, dividends, and rent. They match only when a single paycheck is your only income.