You got hired at $60,000 a year. Your first paycheck shows nowhere near $60,000 divided by 26. That is not a mistake, and your employer is not shorting you. What you agreed to was your gross pay — the number before anything comes out. What lands in your account is your net pay, and between the two sits a stack of deductions that most people have never actually added up.
The gap is usually bigger than people expect — often 20% to 35% of the total. Here is every layer that gets peeled off on the way from gross to net.
Gross pay is the starting number
Gross pay is everything you earned in the pay period before a single deduction. For a salaried worker it is your annual salary split across your pay periods — $60,000 a year paid every two weeks is $2,307.69 of gross per check. For an hourly worker it is your rate times your hours, plus any overtime, plus tips, plus bonuses or commissions if you got them.
Everything that comes next is subtracted from this number. So the order matters, and it is not the order most people assume. Some deductions come out before taxes are calculated, which quietly lowers the tax you pay. Others come out after. That sequence is the whole game.
Pre-tax deductions come out first
Before any tax is calculated, certain deductions get pulled from your gross. The common ones are your share of health insurance premiums, contributions to a traditional 401(k) or 403(b), and money going into an HSA or FSA. These are called pre-tax deductions because they lower the amount of pay that gets taxed.
This is why a $200 pre-tax deduction does not actually cost you $200 in take-home. If that $200 was going to be taxed at a combined 25% or so, sheltering it saves you the tax you would have paid on it, so your check only drops by around $150. It is one of the few places in payroll where the math works in your favor.
One nuance worth knowing: a traditional 401(k) contribution lowers your income-tax bill but is still subject to Social Security and Medicare. Health premiums and HSA money under a proper plan typically dodge both. The categories are not all treated the same.
Then the taxes come out
What is left after pre-tax deductions is your taxable pay, and this is what the tax lines are calculated against. Three federal taxes hit almost every check. Social Security takes 6.2% of your wages, up to a $184,500 ceiling in 2026. Medicare takes 1.45% of all your wages with no ceiling. Together those two are FICA, and together they are 7.65%. On top of that, federal income tax is withheld based on what you put on your W-4.
Then, in most states, state income tax comes out too, and a handful of cities and school districts add a local tax on top. Nine states have no state income tax at all, so if you work in one of those, that line simply is not on your stub.
A worked example, dollar by dollar
Take that $60,000 salary, paid biweekly. Gross per check is $2,307.69. Say you put $100 into a traditional 401(k) and $50 toward a pre-tax health premium — $150 in pre-tax deductions. That leaves $2,157.69 as the base for income tax.
Now the FICA math, which is calculated on your full gross minus only the health premium (the 401(k) does not reduce FICA). On roughly $2,257.69, Social Security at 6.2% is about $140.00 and Medicare at 1.45% is about $32.74. Federal income tax depends entirely on your W-4, but for a single filer with nothing extra elected it might land near $200 on this check. Add a state with, say, a 4% income tax and that is roughly $86 more.
Stack it up: $2,307.69 gross, minus $150 pre-tax, minus about $140 Social Security, minus about $33 Medicare, minus about $200 federal income tax, minus about $86 state tax. Net pay is roughly $1,699 — about 74% of the gross. The other quarter of your paycheck went to your future benefits, the government, and your own pre-tax savings.
Post-tax deductions are the last stop
A few things come out after taxes are already calculated. Roth 401(k) contributions are post-tax by design — you pay the tax now so the withdrawals are tax-free later. Wage garnishments, union dues, some disability insurance, and charitable giving through work also sit here. These reduce your net directly without changing your tax.
Net pay is what is left after all of it: the actual number that hits your bank account or shows up on your check. If you have direct deposit set up, that final figure is what moves. On a Payrollix stub, gross sits at the top, every deduction is itemized with its own line and a year-to-date total, and net is the number at the bottom — so you can trace the whole path from the salary you were promised to the money you can spend.
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