What is the term for the amount of money an employee takes home after taxes and deductions?

The term that refers to the amount of money an employee takes home after taxes and deductions is net pay. This is the figure you see on a paycheck after all mandatory withholdings, such as income tax and social security, along with any voluntary deductions like retirement contributions or health insurance premiums, have been subtracted from the gross pay.

Net pay is vital for individuals to understand as it represents the actual income available for personal use, budgeting, and financial planning. It allows employees to grasp how much of their earnings will be available for spending after fulfilling their tax obligations and other deductions.

In context, gross pay is the total earnings before any deductions occur, while payroll expenses refer to the total costs incurred by an employer related to the employment of their staff, including wages, benefits, and taxes. Compensation is a broader term that encompasses the total rewards given to employees, which can include salary, benefits, bonuses, and other forms of remuneration. These other terms do not reflect the amount that an employee ultimately receives for their personal use, which is why net pay is the correct choice.