What is net pay?

Net pay is the amount of money an employee receives in their paycheck after all deductions have been taken out of their gross pay. These deductions typically include federal and state taxes, Social Security, Medicare, and any other withholdings such as health insurance premiums or retirement contributions. Net pay is often referred to as 'take-home pay' because it is the actual amount employees can spend or save after all mandatory and voluntary deductions are subtracted from their total earnings.