What is the difference between net pay and gross pay?

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Net pay is the amount an employee takes home after all mandatory and voluntary deductions, such as taxes and insurance, have been subtracted from their gross pay. Gross pay, on the other hand, represents the total earnings before any deductions and serves as the starting point for calculating an employee’s compensation, including bonuses and other forms of income. The disparity between net pay and gross pay underscores the impact of various deductions on the actual income received by an employee.