What does net pay refer to in a salary context?

Net pay refers to the amount of income an employee takes home after all deductions have been made from their gross pay. This includes not just federal and state taxes, but also other deductions such as Social Security, Medicare, health insurance premiums, retirement contributions, and any other employee benefits.

This definition highlights that net pay is the final amount that an employee receives on their paycheck and is essential for budgeting personal finances. Understanding net pay helps employees assess their true earnings and manage spending accordingly.

The other options misrepresent different aspects of an employee's earnings. Total income before taxes refers to gross pay, income including bonuses is effectively part of gross pay as well but does not account for deductions, and federal income tax withheld specifically refers to one type of deduction rather than the overall outcome on the paycheck after all deductions.