Which term refers to the amount of money an employee takes home after deductions?

The term that refers to the amount of money an employee takes home after deductions is net pay. This figure is determined by subtracting all applicable deductions from the gross pay, which includes taxes, retirement contributions, health insurance premiums, and other withholdings. This is the amount that employees actually receive in their paychecks and can spend or save.

Understanding net pay is crucial in payroll accounting because it reflects the real earnings of an employee, making it essential for budgeting and financial planning. This clear distinction between gross pay—the total earnings before any deductions—and net pay helps both employees and employers grasp the impact of various deductions on overall compensation.