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Gross Pay Definition

October 19, 2016

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Term Definition
The amount of salary or wages earned by an employee, before any deductions or contributions are subtracted from the total earnings.

Extended Definition
Also known as “gross wages” or “gross income,” gross pay is an individual’s total earnings before subtracting federal income tax, Medicare and Social Security taxes, state and local income taxes, health and dental insurance premiums, retirement contributions, contributions to flexible spending accounts and other obligations. The employee will only have access to net pay for the purpose of paying bills, rent, etc.

Related Blog Articles:
Understanding Take-Home Pay
What Is Net Pay?
Gross Pay to Net