What is gross-to-net in payroll?
Gross-to-net is the payroll calculation that takes an employee's gross pay for a period, including salary, overtime, bonuses and taxable benefits, and subtracts income tax, social security, pension or retirement contributions and other deductions to arrive at net pay, the amount actually paid to the employee. The gross-to-net report shows every step for every employee.
Also calledgross to net payG2Nnet pay calculation
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- Starts with
- Gross pay
- Ends with
- Net pay
- Category
- Payroll
How the gross-to-net calculation works
The calculation runs in a set order. Gross pay is built from salary or hours, overtime, commissions, bonuses and allowances. Pre-tax deductions, such as pension contributions under net pay arrangements or salary sacrifice in the UK, and 401(k) contributions and some health premiums in the US, reduce taxable pay. Income tax and social security are then calculated on the right base for each tax. Post-tax deductions follow: student loan repayments, court orders, union fees and repayments of advances. What remains is net pay. The gross-to-net report, by employee and in total, is what payroll teams check before approving a run and what finance uses to post the payroll journal, so employer costs that are not deducted from pay, such as employer social security, appear alongside it. Payroll platforms such as PayFit, Gusto, Rippling and Symmetrical.ai produce it every run.
Common questions
What is the difference between gross pay and net pay?+
Gross pay is what an employee earns before anything is taken off. Net pay, or take-home pay, is what is paid into their account after taxes and deductions.
What are pre-tax deductions?+
Deductions taken from pay before tax is calculated, which reduce taxable income: for example pension or 401(k) contributions and some benefits. Which deductions qualify depends on each country's rules.
Why do payroll teams review a gross-to-net report?+
To catch errors before payment: unexpected changes in gross pay, missing deductions, wrong tax codes or negative net pay. Comparing it with the previous period highlights what changed.
Payroll software that runs the gross-to-net
PayFitAutomated European payroll, leave and compliance.Profile →
GustoPayroll, benefits and HR built for small businesses.Profile →
RipplingPayroll, benefits and IT unified on one employee record.Profile →
Symmetrical.aiAutomated multi-country European payroll.Profile →
DeelGlobal payroll, contractors and employer of record hiring.Profile →
RemoteEmployer of record and international payroll management.Profile →Part of Accountio’s accounting technology coverage · Glossary
