Gross wages

Gross wages are the grand total of all earnings by an individual before deductions have been removed. This figure is considered the "top line" earnings of an employee. Examples of the components of gross wages are:

  • Hourly wages
  • Salaries
  • Tips
  • Commissions
  • Piece rate pay
  • Overtime
  • Sick pay
  • Vacation pay
  • Holiday pay
  • Bonuses

The bulk of gross wages are usually either salaries or wages.

As an example of gross wages, Mr. Arnold works 45 hours at an hourly pay rate of $20. His gross wages are $950 (calculated as 40 regular hours x $20/hour, plus 5 hours x $30/hour).

After deductions have been taken from gross wages, the amount remaining, and which is paid to the individual, is called net pay. Examples of deductions from gross wages are:

  • Social security tax
  • Medicare tax
  • Garnishments
  • Health insurance
  • Dental insurance
  • Life insurance
  • Pension contributions
  • Charitable contributions

Related Courses

Human Resources Guidebook 
Payroll Management