Gross wages definition
/What are Gross Wages?
Gross wages are the total amount paid to an employee before deductions have been removed. This figure is considered the "top line" earnings of an employee. It includes hourly wages, salaries, tips, commissions, piece rate pay, overtime, and bonuses. The bulk of gross wages are usually either salaries or wages. The gross wages of a salesperson may be primarily comprised of commission pay.
Example of 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). The increased rate of $30/hour represents a 50% boost over his normal hourly wage, because he has exceeded 40 hours, and so is entitled to overtime.
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Examples of Deductions from Gross Wages
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 the social security tax, Medicare tax, garnishments, health insurance, dental insurance, life insurance, pension contributions, and charitable contributions.