Gross Pay
Total earnings before any deductions.
Gross pay is an employee's total compensation before taxes, benefits, and other deductions are subtracted. It includes base wages or salary, overtime pay, bonuses, commissions, and tips. For salaried employees, gross pay is the annual salary divided by pay periods. For hourly employees, it's hours worked multiplied by the hourly rate plus any overtime or premium pay.
Formula
Gross Pay (hourly) = (Regular Hours × Rate) + (Overtime Hours × Rate × 1.5) + BonusesExample
An employee earning $60,000/year has gross pay of $2,500 per semi-monthly pay period ($60,000 ÷ 24), before any deductions for taxes, insurance, or retirement.
Why It Matters for Your Business
Gross pay is the baseline for calculating all payroll taxes and deductions—errors here cascade through every payroll calculation.
Related Terms
More Payroll Terms
Employee Benefits
Non-wage compensation like health insurance and retirement plans.
Net Pay
The amount received after all deductions.
Overtime Pay
Additional compensation for hours worked beyond 40 per week.
Hourly Rate
Pay rate calculated per hour worked.
Salary
Fixed annual compensation regardless of hours worked.
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