What is Gross to Net?
Gross to Net refers to the process of calculating the net amount of something (like salary or profit) after all deductions have been made from the gross amount.
Explanation
In payroll, this involves subtracting taxes, social security contributions, benefits, and other deductions from an employee’s gross salary to determine their take-home pay.
Practical Example of Gross to Net:
An employee’s monthly gross salary is $4,000. After deducting federal and state taxes, health insurance premiums, and retirement contributions, their net (take-home) pay is $2,800.