What is defined as the payroll amount an employee receives after taxes and deductions?

Net pay is the amount that an employee receives after all taxes and deductions have been subtracted from their gross pay. Gross pay represents the total earnings before any deductions, including taxes for Social Security, Medicare, income tax, and any other withheld amounts such as retirement contributions or health insurance premiums.

Net pay is crucial for employees as it reflects what they take home and can spend or save. Understanding net pay is essential for financial planning and budgeting, as it gives a clear picture of an individual's actual income after all obligations have been met.

In contrast, gross pay provides an initial figure of earnings which may be misleading if not understood with respect to deductions. Overtime pay refers specifically to additional payment for hours worked beyond the standard workweek, while commission pay is based on performance, typically linked to sales efforts, and does not represent an overall measure of an employee's take-home income.