What is Gross pay?
Gross pay is the full amount you earned before any taxes, deductions, or withholdings are removed. It's the top-line earnings figure on a paystub — calculated from your hourly rate × hours worked (for hourly employees) or your salary divided across pay periods (for salaried employees), plus any overtime, commissions, bonuses, or other additions.
Full explanation
Gross pay is the starting point on every paystub. For an hourly employee, it's hours worked × hourly rate, plus any overtime hours × overtime rate (usually 1.5× regular rate over 40 hours per week under federal FLSA rules; state law may add stricter daily overtime). For a salaried employee, it's the annual salary divided by the number of pay periods (52 for weekly, 26 for bi-weekly, 24 for semi-monthly, 12 for monthly).
Additions stack on top of base earnings: commissions, performance bonuses, holiday pay, on-call pay, tips reported to the employer, retroactive pay adjustments. Each typically appears as its own line in the earnings section so it's clear what produced the total. Pre-tax benefit elections (like 401(k) or health insurance) are deducted from gross pay BEFORE federal income tax is calculated.
The gap between gross pay and net pay is everything the employer withholds — federal income tax, state income tax (where applicable), FICA (Social Security + Medicare), benefit premiums, retirement contributions, and any garnishments. For a typical W-2 employee, net pay runs 65–80% of gross pay depending on tax bracket, state, and benefit elections.
Lenders and landlords almost always ask for gross pay (not net) when evaluating income, because the gap to net pay varies wildly by individual choices (e.g., maxing out 401(k) reduces net pay but isn't a sign of lower earning capacity). Gross pay × pay periods per year = annual gross income.
Frequently asked questions about Gross pay
How is gross pay calculated?
Hourly employees: hours worked × hourly rate, plus overtime hours × overtime rate. Salaried employees: annual salary ÷ pay periods per year. Both add commissions, bonuses, holiday pay, and any other additions on top.
Why is gross pay used for loan applications instead of net pay?
Net pay varies based on individual elections (401(k) contributions, benefit premiums, voluntary deductions) that don't reflect actual earning capacity. Gross pay is the consistent, comparable number lenders use to evaluate income across applicants.
Does gross pay include overtime and bonuses?
Yes. Gross pay is the total of all earnings for the pay period — base pay + overtime + commissions + bonuses + holiday pay + any other compensation, before any taxes or deductions.