# Gross Wages

## What Are Gross Wages?

Gross wages is the amount of money an employee earns before deductions are taken out. Gross wages are set by the employer either with an hourly wage or an annual salary.

Hourly workers, also known as non-exempt employees, can calculate their gross wages by multiplying their hours worked by their hourly wage. Typically, that total gross wage appears on your pay stub as the largest number. The pay stub should also break down the difference between gross pay and take-home pay.

As an exempt, or salaried, employee, your gross pay is your annual salary. Similar to hourly employees, you’ll still see a breakdown of each paystub to indicate gross pay, deductions taken out, and your take-home pay.

## How Do You Calculate Gross Wages?

Calculating gross pay depends on a variety of factors from your hourly or annual wages, to how often you work (full-time, part-time, seasonal, etc.) and how often your company processes payroll. Gross wages include hourly wages, salary, overtime, commissions, tips, holiday pay, sick pay, vacation pay, and bonuses.

### Calculating Gross Pay for Salaried Workers

Gross wages for a salaried employee are pretty simple to calculate. It’s their annual salary without any deductions. If you wanted to determine gross wages per month, it would be gross annual pay divided by 12.

**First Example:**

If a Sales Manager makes $60,000 per year, you’d divide that by 12 to get $5,000 gross pay per month.

**Second Example:**

If an IT Director makes $72,000 per year plus a quarterly bonus of $3,000, you’d add $72,000 + ($3,000 multiplied by 4 quarters in the year) and divide it by 12 to get $7,000 gross pay per month.

### Calculating Gross Pay for Hourly Workers

Gross wages for an hourly employee can be a bit more complicated because hours worked may vary each week or month. Ultimately, you calculate the hours worked in each pay period and multiply it by the hourly wage.

**First Example:**

A part-time Hairstylist makes $18 per hour and works 20 hours each week. To calculate their bi-weekly paycheck, you’d take $18 multiplied by 20 hours, and multiply that by 2 weeks to get a gross bi-weekly pay of $720.

**Second Example:**

A Customer Success Manager makes $25 per hour and works 40 hours each week. To calculate their annual pay, you’d take $25 multiplied by 40 hours, and multiply that by 52 weeks to get a gross annual pay of $52,000.

## What Is the Difference Between Net and Gross Salary?

Gross salary is an employee’s pay before any deductions or withholdings. Net salary is the pay an employee receives after local, state, and federal level deductions are taken out. Deductions can include taxes, social security, medicare, and more.

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