What are gross wages?

Gross wages comprise the grand total of all earnings by an individual before any deductions have been taken out. Examples of the components of gross wages are:

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

Gross wages are generally considered to be hours worked multiplied by the hourly wage rate, but as you can see from the preceding list, there may be a number of other types of compensation that could be considered gross 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 Topics

How do I calculate accrued vacation pay? 
Overtime pay 
Piece rate pay
What is holiday pay? 
What is net pay?