What is gross-to-net payroll?

Gross-to-net payroll is the process of starting with gross pay, applying taxable wage rules, withholding employee taxes and deductions, and calculating the employee's net pay.

What is the difference between gross pay and net pay?

Gross pay is pay before taxes and deductions. Net pay is the amount remaining after required and authorized taxes and deductions are withheld.

Do pretax deductions reduce all payroll taxes?

Not always. A deduction may reduce one taxable wage base but not another, depending on the type of deduction and the tax involved.

Free payroll calculator

Gross-to-net payroll calculator.

Estimate taxable wages, employee taxes, deductions, and net pay with a simple federal payroll calculator built for payroll workers, payroll students, and FPC/CPP candidates.

Use the calculator Practice payroll calculations

Important: This is an educational federal estimate. It does not replace payroll system calculations, Form W-4 withholding methods, state or local rules, employer benefit setup, garnishment orders, or professional payroll advice.

Calculator inputs

Gross pay

Regular wages plus other earnings for this check.

Prior YTD FICA wages

Used for Social Security wage base and Additional Medicare Tax.

Pretax health / Section 125

Modeled as reducing FIT and FICA wages.

Pretax retirement deferral

Modeled as reducing FIT wages, not FICA wages.

Federal FIT estimate (%)

Use a simple percentage estimate for federal income tax withholding.

State / local estimate (%)

Optional flat estimate.

Post-tax deductions

Benefits, repayments, or other post-tax deductions.

The gross-to-net sequence

Different employers and systems label steps differently, but the logic is usually the same.

Step 1

Start with gross pay

Regular wages plus applicable overtime, bonuses, commissions, and other earnings.

Step 2

Apply pretax deductions

Some deductions reduce FIT wages, FICA wages, or both. The tax treatment matters.

Step 3

Withhold taxes

Calculate FIT, Social Security, Medicare, Additional Medicare Tax, and state or local estimates.

Step 4

Subtract post-tax deductions

Post-tax deductions and garnishments generally come after tax withholding.

A simple study formula

Gross pay – pretax deductions – employee taxes – post-tax deductions = net pay.

The tricky part is knowing which wages are taxable for which tax and which deduction happens at which stage.

Practice the calculation by hand.

The CPP Payroll Calculations Workbook gives you worked examples, practice questions, and explanations for the payroll math behind this calculator.

Download the free sample chapter See the full workbook

Primary sources: IRS Publication 15 (2026), IRS Publication 15-T (2026), and SSA contribution and benefit base. This page is for payroll study and quick-check support, not legal, tax, accounting, or payroll advice.