Gross vs net salary
Also known as: gross salary, net salary, take-home pay
Gross salary is the amount stated in the employment contract before any deductions. Net salary is what lands in the employee's bank account after income tax, social-security contributions, and pension contributions are withheld. The gap between them varies by country, typically 15% to 45%.
The gross/net distinction is the single most common source of payroll confusion for both employees and small employers. Job offers usually quote gross figures; bank statements show net. When a candidate asks "is that gross or net?" the answer should always be ready, because the implied take-home of the same gross figure varies by tens of percentage points across countries — and within a country, by tax residency status.
What typically gets withheld
- Personal income tax (rate varies by country and bracket)
- Social-security / national-insurance contributions (employee share)
- Pension fund contributions (mandatory or opt-in depending on country)
- Health-insurance contributions where employer-sponsored is mandatory
- Other statutory withholdings (e.g., solidarity surcharges, church tax in some countries)
- Voluntary deductions (loan repayments, additional pension, garnishments)
Why companies state gross
Gross is the only figure the employer fully controls. Net depends on the individual employee's tax situation (residency, marital status, dependents, other income) — the employer cannot guarantee a specific net amount because the deductions are partly out of their hands. Contracts therefore quote gross, and pay-stubs reconcile gross to net.
Frequently asked questions
- What is the difference between gross and net salary?
- Gross salary is the contract figure before deductions. Net salary is what arrives in the employee's bank account after income tax, social-security contributions, and pension contributions are withheld.
- How do I calculate net salary in Georgia?
- For Georgian citizens: gross × 0.78 ≈ net (20% income tax + 2% employee pension contribution). Use the calculator at /tools/georgia-salary-calculator for exact figures including allowances and edge cases.
- Do job offers quote gross or net salary?
- In most countries including Georgia, job offers quote gross. Net depends on the individual employee's tax situation and is not something the employer can guarantee exactly.
- Is the employer's cost the same as gross salary?
- No. The employer cost is typically higher than gross because the employer also pays their share of social-security and pension contributions on top of gross. In Georgia, the employer adds 2% pension contribution above gross.