Annual Salary
The total gross pay an employee earns over one year, before taxes and deductions. Most conversions use a 2,080-hour work year (40 hours × 52 weeks) to move between salary and hourly figures.
Annual Salary Calculator25 payroll terms · plain English · 2026 rules
Payroll Glossary: Every Paycheck Term, Explained
Gross pay, net pay, overtime, PTO, FICA, exempt vs non-exempt — the words on your pay stub and job offer, defined in plain English. Where a term has math behind it, we link the free calculator that does it.
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Biweekly Pay Period
A payroll schedule where employees are paid every two weeks, producing 26 paychecks per year. Two months each year contain a third paycheck, which matters for budgeting and benefit deductions.
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Deductions
Amounts subtracted from gross pay. Pre-tax deductions (401(k), health premiums) lower taxable income; post-tax deductions (Roth contributions, garnishments) do not. Deductions are the difference between gross pay and net pay.
Double Time
Pay at two times the regular hourly rate. Federal law does not require double time, but some states do — California pays it after 12 hours in a day, and many union contracts and employer policies include it for holidays or extreme hours.
Double Time CalculatorE
Exempt Employee
A worker not entitled to overtime under the FLSA. Exemption requires meeting a salary threshold, being paid on a salary basis, and performing executive, administrative, or professional duties. Job titles alone never decide exemption.
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FICA
The Federal Insurance Contributions Act tax: 6.2% for Social Security (up to the annual wage cap) and 1.45% for Medicare, paid by both employee and employer. High earners pay an extra 0.9% Medicare surtax above $200,000.
FICA CalculatorFLSA
The Fair Labor Standards Act, the primary federal law governing minimum wage, overtime pay, and child labor. Under the FLSA, non-exempt employees must receive overtime at 1.5 times their regular rate for hours worked over 40 in a workweek.
FLSA Overtime CalculatorG
Garnishment
A court-ordered or government-ordered deduction from pay, such as child support, tax levies, or defaulted student loans. Federal law caps most garnishments at 25% of disposable earnings.
Gross Pay
Total earnings before any taxes or deductions: regular wages plus overtime, bonuses, commissions, and shift differentials. Gross pay is the starting point of every paycheck calculation, not the amount deposited.
Gross Pay CalculatorH
Holiday Pay
Pay for work performed on a holiday. Federal law does not require premium holiday pay — any extra rate (often 1.5× or 2×) comes from employer policy or a union contract. Some states have their own rules.
Holiday Pay CalculatorN
Net Pay
Take-home pay: gross pay minus all taxes and deductions. Net pay is what actually lands in your bank account, and it is usually 65–80% of gross pay depending on state tax and benefits.
Take Home Pay CalculatorNon-Exempt Employee
A worker entitled to overtime pay under the FLSA. Most hourly employees are non-exempt. Employers must track their hours and pay 1.5 times the regular rate for hours over 40 in a workweek.
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Overtime
Hours worked beyond the legal threshold — federally, over 40 in a workweek — paid at a premium rate. Some states add daily overtime: California after 8 hours in a day, and several states have their own daily rules.
Overtime Calculators HubP
Pay Period
The recurring span of work covered by one paycheck: weekly, biweekly, semimonthly, or monthly. Overtime is always calculated by workweek, never by pay period, even on biweekly or monthly schedules.
Pre-Tax Deductions
Deductions taken before income tax is calculated — traditional 401(k) contributions, health insurance premiums, HSA and FSA contributions. They lower taxable wages, so they reduce the tax you owe today.
PTO (Paid Time Off)
Paid hours employees can use for vacation, illness, or personal time. Federal law does not require PTO, but once promised, many states treat accrued PTO as earned wages that must be paid out at separation.
PTO Payout CalculatorR
Regular Rate of Pay
The hourly figure used to compute overtime. It includes not just base hourly pay but also nondiscretionary bonuses, shift differentials, and commissions earned in the workweek. A wrong regular rate means wrong overtime pay.
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Semimonthly Pay Period
A payroll schedule with two paychecks per month, typically on the 1st and 15th, producing 24 paychecks per year. Unlike biweekly, paychecks arrive on fixed dates rather than fixed weekdays.
Shift Differential
Extra pay for working less-desirable shifts, such as nights or weekends — often a percentage (10–15%) or a flat amount per hour. Shift differentials count toward the regular rate when calculating overtime.
Shift CalculatorT
Taxable Wages
The portion of gross pay subject to a given tax after pre-tax deductions. Different taxes use different bases: a 401(k) lowers federal income-tax wages but not FICA wages, and Social Security stops at its annual wage cap.
Time and a Half
The standard overtime rate: 1.5 times the regular rate of pay. At $20 per hour, time and a half is $30 per hour. Federal law requires it for non-exempt hours over 40 in a workweek.
Time and a Half CalculatorW
W-2 Employee
A worker whose employer withholds income tax and pays half of FICA. W-2 employees are usually protected by overtime and minimum wage laws, unlike independent contractors, who receive a 1099 and handle their own taxes.
Wage Base (Social Security Cap)
The maximum annual earnings subject to Social Security tax, adjusted each year. Earnings above the wage base are not taxed for Social Security, though Medicare tax has no cap.
Social Security Tax CalculatorWithholding
The income tax an employer sends to the IRS and state on the employee's behalf, based on the W-4 form. Withholding is an estimate — the true tax bill is settled when you file your return.
Federal Tax CalculatorWorkweek
A fixed, regularly recurring period of 168 hours (7 consecutive 24-hour periods) that the employer chooses. Overtime is always calculated within a single workweek; averaging hours across two weeks is never allowed.
Why these definitions decide real money
Most paycheck disputes are definition disputes. If your employer calls a bonus "discretionary" when it was announced in advance, it may belong in your regular rate — and every overtime hour that week should have been paid higher. If you are called "exempt" but your duties do not match the legal tests, you may be owed years of unpaid overtime. And if your state treats accrued PTO as earned wages, a "use it or lose it" policy may not be enforceable at all.
The definitions above follow federal FLSA rules and 2026 rates. Where states go further — daily overtime, PTO payout, higher minimum wages — the state calculators and guides linked across this site carry the local rule.
Related hubs and guides
Payroll glossary FAQs
Calculate Overtime by State
Select your state for accurate 2026 overtime calculations
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