Gross wages refer to the total amount of money an employee earns before any deductions are taken out.
This also includes the employee’s base pay, as well as any bonuses, commissions, or overtime pay they may have earned during a pay period.
Gross wages are important to both employees and employers because they are used as the starting point for calculating various payroll taxes and other deductions.
These deductions can include federal and state income tax, Social Security and Medicare taxes, and any other benefits or contributions that may be required by law or company policy.
After all the deductions are taken out of an employee’s gross wages, the remaining amount is known as net pay or take-home pay. Net pay is the actual amount of money that the employee receives in their paycheck.
