How to Read Your First Payslip Abroad: Gross, Net and Every Deduction, Country by Country

You open your first payslip in a new country, see the gross figure that matched your offer letter, and then your eyes travel down a column of deductions you have never heard of: FICA, NI, CPP, EI, a pension line, a tax line, sometimes a student loan line. By the time you reach the net figure at the bottom, a chunk of your salary has vanished into acronyms, and the number that actually lands in your bank account is meaningfully smaller than the one you negotiated. For an Indian used to a relatively simple Indian payslip with a single TDS line, this is genuinely disorienting, and it directly determines the one thing you came abroad to do: build a corpus back home.

The 30-second answer: Your offer letter is gross; your payslip is net, after deductions that range from almost nothing to over 40%. In the US, expect federal income tax withholding, state income tax in most states, and 7.65% FICA (6.2% Social Security up to a 184,500 dollar wage base in 2026, plus 1.45% Medicare), before any voluntary 401k. In the UK, expect PAYE income tax (20% basic, 40% higher), National Insurance at 8% then 2%, a 5% pension auto-enrolment contribution, and a student loan line if you studied in the UK. In Canada, expect federal and provincial tax, CPP at 5.95%, EI at 1.63%, and any RRSP you choose. The UAE has no income tax, so net is close to gross, with end-of-service gratuity accruing in the background. Tax that was over-withheld is recoverable on your annual return; pension money is yours; social contributions are mostly spent on future entitlement.

This guide walks down a real payslip in each of the four countries an Indian most commonly moves to for work, explains what every line is, shows a worked gross-to-net example for the US, UK and UAE, and then tells you which deductions you can claw back and which are gone. If you have not yet set up where your foreign salary lands and how you send it home, read sending your first salary home and the first-month-abroad money setup alongside this; this guide is about understanding the slip itself.

Gross versus net: the one idea that explains everything

Before any acronym, fix the distinction that the entire payslip is built around. Gross pay is what you earn before anything is taken out. It is the figure in your offer letter, your annual salary divided into monthly or fortnightly slices. Net pay, also called take-home pay, is what is left after deductions, and it is the only figure that ever reaches your bank account.

The deductions sit in three buckets, and keeping them separate is what stops a payslip from being frightening:

The first bucket is income tax, money the government takes and keeps. This is the largest line in high-tax countries and is genuinely gone, except where too much was withheld and you reconcile it later.

The second bucket is social or payroll contributions, money that funds state pensions, healthcare and unemployment insurance. In the US this is FICA, in the UK National Insurance, in Canada CPP and EI. You do not get this back as cash, but it buys you future entitlement, and for an Indian who may not stay, that entitlement is the part worth understanding, because a totalisation agreement can sometimes let it count.

The third bucket is your own savings, chiefly retirement contributions: the US 401k, the UK workplace pension, the Canada RRSP. This bucket is not lost at all. It is your money, moved from your current account into an investment account with your name on it, and it usually reduces the tax in bucket one. A payslip that shows a large pension deduction is not a payslip where you are poorer; it is one where you are saving aggressively and tax-efficiently.

Read every line you do not recognise and ask which bucket it belongs to. Tax is spent, social contribution is future entitlement, savings is yours. The deductions feel identical on the slip because they all reduce net pay, but their meaning for your wealth could not be more different.

The United States: federal tax, state tax, FICA, and 401k

The American payslip, usually called a pay stub, is the densest of the four. A single earner on a mid-level salary commonly sees 25% to 35% disappear before voluntary deductions, and in a high-tax state more.

Federal income tax withholding is the largest line. The US has seven federal brackets in the 2026 tax year, running 10%, 12%, 22%, 24%, 32%, 35% and 37%, applied progressively, and a standard deduction of 16,100 dollars for a single filer in 2026. Your employer estimates your annual tax from the Form W-4 you filled out on joining and withholds a slice each pay period. The W-4 is where you declare filing status and dependents; fill it carelessly and you will either over-withhold (a large refund, meaning you lent the government money free for a year) or under-withhold (a bill, possibly with a penalty). For a new arrival with no spouse or dependents and one job, the default single, no-adjustments W-4 is usually close to correct.

State income tax is the line that surprises Indians most, because it depends entirely on where you live. Nine states, including Texas, Florida and Washington, levy no state income tax at all, which is why a software engineer in Austin keeps noticeably more than an identically paid one in California, where the top state rate exceeds 13%. New York City even adds a city income tax on top of the state. Before you compare two US offers, find out the state, because the gap between zero and double-digit state tax on the same salary is real money.

FICA is the social contribution bucket, and it is fixed and unavoidable on wage income. It is 7.65% total, split as 6.2% for Social Security and 1.45% for Medicare. Social Security applies only up to the annual wage base, which is 184,500 dollars in 2026; earn above that and the 6.2% stops, though Medicare's 1.45% continues on all wages, with an extra 0.9% Additional Medicare Tax on wages above 200,000 dollars for a single filer. FICA is where your future US Social Security pension is funded, and this is exactly where the US-India totalisation question bites: India and the US have no totalisation agreement, so an Indian on an H-1B pays FICA for years and, unless they accumulate the 40 credits (roughly ten years) needed to vest, may never draw a cent of it. That is the honest read on FICA for a short-stay Indian: it is a real cost with an uncertain return.

401k is the voluntary retirement line, and it is the one you should not skip. You elect a percentage of salary to divert pre-tax into an investment account; the 2026 elective deferral limit is 24,500 dollars. Two things make it valuable. First, the contribution reduces your taxable income now, so a dollar into the 401k costs you less than a dollar of take-home. Second, most employers match a portion, commonly 50% of the first 6% you contribute. That match is free money with an instant 50% return, so the minimum sensible 401k contribution is whatever captures the full match. The catch for an Indian who may leave is access: 401k money is locked until 59 and a half, with a 10% early-withdrawal penalty plus tax if you cash out early, so treat it as a long-horizon US asset, not a remittable pool.

Worked example: a 100,000 dollar US salary in Texas versus California

Take Priya, a single engineer earning 100,000 dollars gross, no dependents, contributing 6% to her 401k to capture the match. Work it in annual figures.

Her 401k contribution is 6,000 dollars, taken pre-tax, so her wages for income tax become 94,000 dollars. Subtract the 16,100 dollar standard deduction and her federal taxable income is about 77,900 dollars. Applying the 2026 brackets progressively, her federal income tax is roughly 12,400 dollars.

FICA is charged on her full salary, not the post-401k figure, because Social Security and Medicare do not care about 401k. That is 7.65% of 100,000, or 7,650 dollars.

In Texas, with no state income tax, her deductions are 6,000 (401k) plus 12,400 (federal) plus 7,650 (FICA), totalling 26,050 dollars. Her net is about 73,950 dollars, or roughly 6,160 dollars a month, and 6,000 of that net is sitting in her own 401k.

In California, add state income tax of roughly 5,500 dollars on the same income. Her net drops to about 68,450 dollars. Same offer letter, same job, 5,500 dollars a year difference purely from the state line.

Converted at roughly Rs 86 to the dollar, Priya's Texas net of about 6,160 dollars a month is around Rs 5.3 lakh of take-home, before her US rent and living costs come out and before she decides how much to remit. The headline 100,000 dollar offer was never the number that reaches India.

The United Kingdom: PAYE, National Insurance, pension, and student loan

The British payslip is cleaner than the American one, because most of it runs through a single system called PAYE (Pay As You Earn) and your tax is collected automatically against a code.

Income tax under PAYE uses your tax code, a short string like 1257L that tells the employer your tax-free allowance. The standard personal allowance is 12,570 pounds for 2025/26, the slice you earn tax-free. Above it, the basic rate is 20% on income up to 50,270 pounds, the higher rate is 40% up to 125,140 pounds, and the additional rate is 45% above that. There is a trap that catches well-paid arrivals: once your income passes 100,000 pounds, your personal allowance is withdrawn by 1 pound for every 2 pounds over, creating an effective marginal rate around 60% in the 100,000 to 125,140 band. If your tax code looks wrong in your first months, that is common for new arrivals; HMRC often puts you on an emergency code until it has your full-year picture, and it self-corrects.

National Insurance is the social contribution bucket. The employee rate is 8% on earnings between 12,570 and 50,270 pounds a year, dropping to 2% on earnings above 50,270. NI funds the UK State Pension and contributory benefits. Unlike US FICA, the UK and India do have arrangements that matter for some workers, and your NI record builds toward a UK State Pension you can claim later even from abroad, so it is less of a dead loss than US Social Security is for a short-stay Indian.

Pension auto-enrolment is a line nearly every employee now sees. By law you are automatically enrolled into a workplace pension, with a minimum 5% employee contribution and 3% employer contribution on qualifying earnings (broadly the band between 6,240 and 50,270 pounds in 2025/26). Crucially, your 5% includes basic-rate tax relief: in a relief-at-source scheme you actually pay 4% from your pay and the provider reclaims the other 1% from HMRC. You can opt out, but opting out throws away the employer's 3% and the tax relief, so for almost everyone staying more than a year it is worth keeping. Like the 401k, this money is yours, invested, and accessible from age 55 (rising to 57), so treat it as a UK retirement asset rather than remittable cash.

Student loan appears only if you took a UK student loan, which most fresh Indian arrivals did not, so skip this line if it is blank. If you studied in the UK on a Plan 2 loan, repayment is 9% of everything you earn above the threshold, which is 29,385 pounds from April 2026, collected automatically through payroll. It is income-contingent, so it behaves more like a graduate tax than a normal debt.

Worked example: a 60,000 pound UK salary in London

Take Rohan, single, earning 60,000 pounds gross, no UK student loan, paying the 5% auto-enrolment pension (4% from his pay after relief), working annually.

His personal allowance is 12,570, so he pays income tax on 47,430 pounds. The first 37,700 (up to 50,270) is taxed at 20%, giving 7,540 pounds. The remaining 9,730 (from 50,270 to 60,000) is taxed at 40%, giving 3,892 pounds. Total income tax is about 11,432 pounds.

National Insurance: 8% on the band from 12,570 to 50,270 (that is 37,700 pounds) is 3,016 pounds, plus 2% on the 9,730 above 50,270 is about 195 pounds. Total NI is about 3,211 pounds.

Pension: he pays 4% of his pay into the workplace pension. On 60,000 that is about 2,400 pounds from his take-home, with relief and the employer's 3% added inside the pension.

His deductions are roughly 11,432 (tax) plus 3,211 (NI) plus 2,400 (pension), about 17,043 pounds. His net is around 42,957 pounds, or roughly 3,580 pounds a month, with the pension money invested for him on top.

At roughly Rs 109 to the pound, Rohan's net of about 3,580 pounds a month is around Rs 3.9 lakh of take-home before London rent, which in a one-bedroom flat can easily be 1,800 to 2,200 pounds a month and is the single biggest claim on what is left. The remittable surplus is what survives after that, not a fixed share of the 60,000.

The United Arab Emirates: near-gross pay and the gratuity that builds quietly

The UAE payslip is the one that makes Indians do a double-take, because there is almost nothing on it. The UAE levies no personal income tax on salaries, so there is no income tax line, no social-security deduction for expatriates, and your net pay is essentially your gross pay. The salary in your offer letter is, near enough, the salary in your bank account.

What you do see on a UAE payslip is the structure of the salary itself, usually split into basic salary plus allowances (housing, transport, and sometimes others). This split is not cosmetic, because one important entitlement is calculated only on the basic component.

That entitlement is the end-of-service gratuity, often abbreviated EOSB or gratuity. It does not appear as a deduction; it accrues in the background and is paid as a lump sum when you leave the job, provided you completed at least one year of continuous service. For the first five years, it accrues at 21 days of basic salary for each year of service, and beyond five years at 30 days per year. The critical detail Indians miss is that gratuity is computed on basic salary only, not total package. If your 12,000 dirham monthly salary is structured as 9,000 basic plus 3,000 allowances, your gratuity builds on the 9,000, not the 12,000, so a package that loads pay into allowances quietly shrinks your eventual gratuity. When you compare two Gulf offers, look at the basic-to-allowance split, not just the headline.

Because the UAE takes nothing in tax and very little otherwise, a far higher share of your salary is available to remit home, which is the real reason Gulf packages outperform their headline against high-tax Western ones. A 12,000 dirham salary delivers close to 12,000 dirhams of usable pay, where a nominally larger US or UK salary is taxed down before you touch it. The trade is that you build little in the way of host-country retirement entitlement; your gratuity and your own savings are the whole of it, which puts the burden of building a retirement corpus across two countries squarely on you. The mechanics of actually getting to the Gulf and setting up are in the moving to Dubai for work guide.

Worked example: a 25,000 dirham UAE salary

Take Aisha, earning 25,000 dirhams a month, structured as 15,000 basic plus 10,000 in housing and transport allowances, on a contract she expects to run several years.

There is no income tax and no social-security deduction, so her monthly net is, to a close approximation, the full 25,000 dirhams. There is no federal versus state line, no FICA, no NI, no pension auto-enrolment.

Her gratuity accrues separately. On a 15,000 dirham basic, 21 days of basic salary is (15,000 divided by 30) times 21, about 10,500 dirhams per year of service for the first five years. After three years she would have accrued roughly 31,500 dirhams, payable as a lump sum on departure. Had her employer structured the same 25,000 as 10,000 basic plus 15,000 allowances, her annual gratuity accrual would be only about 7,000 dirhams, a third lower, for the identical take-home. Same payslip net, materially different exit benefit.

At roughly Rs 23.4 to the dirham, Aisha's 25,000 dirham net is around Rs 5.85 lakh a month before her UAE rent and living costs, and almost all of that gross-equals-net figure is genuinely hers to spend or remit. This is why the Gulf, despite often lower headline numbers than the US, can leave more reaching India.

Canada: federal and provincial tax, CPP, EI, and RRSP

The Canadian payslip sits between the US and the UK in complexity and is the heaviest of the four on combined deductions for a mid-level earner, frequently 30% to 40% before voluntary savings.

Federal income tax is progressive, with 2026 brackets of 14% on the first 58,523 dollars, 20.5% to 117,045, 26% to 181,440, 29% to 258,482, and 33% above, with a basic personal amount of 16,452 dollars that is effectively tax-free.

Provincial income tax is charged on top of federal and varies sharply by province, so your real rate depends on where you live, much as US state tax does. Ontario, British Columbia, Alberta and Quebec all run their own brackets, and the combined federal-plus-provincial marginal rate on a good salary commonly lands in the high 30s to mid 40s percent. Compare Canadian offers by province, not just by salary.

CPP, the Canada Pension Plan, is the social contribution bucket. The employee rate is 5.95% on pensionable earnings up to the year's maximum of 74,600 dollars in 2026, for a maximum contribution of about 4,230 dollars. A second tier, CPP2, charges 4% on earnings between 74,600 and 85,000 dollars. CPP builds a Canadian retirement pension, and India and Canada have a social security agreement that can help coordinate entitlement, so CPP is less of a dead loss for a returning Indian than US FICA.

EI, Employment Insurance, funds unemployment and parental benefits. The employee premium is 1.63% on insurable earnings up to 68,900 dollars in 2026, a maximum of about 1,123 dollars. EI is the closest thing on the slip to a pure cost you may never draw, unless you are laid off or take parental leave.

RRSP, the Registered Retirement Savings Plan, is the voluntary line, Canada's equivalent of the 401k. Contributions are tax-deductible, reducing your taxable income now, and many employers offer a group RRSP with matching, which, like the 401k match, is free money you should capture. RRSP money is yours and invested, though withdrawals are taxed, so it is a long-horizon asset rather than remittable cash.

Edge cases

Over-withholding and refunds. The most common new-arrival situation is paying too much tax through the year, because you started mid-year, your withholding assumed a full year of the income you only earned for part of it, or your tax code was an emergency one. This corrects on your annual return. In the US you file Form 1040 after the tax year and any excess comes back as a refund. In Canada you file the T1 return and over-paid tax is refunded. In the UK, PAYE usually self-corrects within the year as the code updates, and where it does not, HMRC issues a P800 reconciliation and a refund after year-end. Over-withholding is not lost money; it is an interest-free loan to the government that you reclaim. The cleaner fix is to get the W-4 (US) or tax code (UK) right early so you neither overpay nor underpay.

Bonus and signing-bonus taxation. A bonus often looks brutally taxed on the payslip it lands in, because payroll systems frequently apply a flat supplemental withholding rate (in the US, commonly 22% federal on the bonus, separate from your normal withholding) or because a one-month spike pushes that period's annualised estimate into a higher band. This is usually a withholding artefact, not your true tax. Your actual liability on the bonus is settled on the annual return at your real marginal rate, so an over-withheld bonus feeds back into your refund. Do not assume a bonus is taxed at the eye-watering rate the single payslip suggests.

Starting mid-year. If you begin work part-way through the tax year, you have used none, or little, of your annual tax-free allowance or standard deduction for the months you were not earning. This usually means your full-year tax is lower than a straight extrapolation of your first payslip implies, and you may be due a refund at year-end. In the UK a mid-year start is the classic trigger for an emergency tax code and a later P800 rebate. In the US and Canada it shows up when you file. The first payslip of a mid-year start is the least representative one you will ever see; do not budget your whole year off it.

Two countries in one tax year, the year you moved. The year you leave India, you may be an Indian tax resident for part of it and earning abroad for the rest, which is a residency question separate from your foreign payslip. Whether your post-move foreign salary is also taxable in India turns on your India day-count that year, covered in the residency and RNOR guide, and any double tax is relieved through the DTAA and the foreign tax credit on Form 67. The payslip tells you the host-country side; the India side is a second calculation.

The closing read

The honest read on your first foreign payslip is that the gap between gross and net is not money disappearing, it is three different things wearing the same costume, and your job is to tell them apart. The tax line is genuinely spent, though over-withholding comes back, so file your annual return and reclaim what was yours. The social-contribution line, FICA, National Insurance, CPP, EI, is mostly future entitlement rather than a dead loss, and for an Indian who may not stay it is worth knowing exactly which of these you can ever draw and which a totalisation agreement can rescue. The retirement line, 401k, workplace pension, RRSP, is not a deduction at all in any meaningful sense; it is forced saving into your own invested account, usually tax-advantaged and often matched, so the floor is always to contribute enough to capture the full employer match because nothing else on the slip offers a guaranteed 50% return. The country pattern is clear: the UAE gives you near-gross pay and the highest remittable share, paid for by almost no state safety net, so the saving discipline is entirely on you. The US and Canada take the most, but a chunk of that is your own retirement money and recoverable over-withholding. The UK sits in between with the tidiest system. For almost everyone reading this, the sequence is the same: read every line and sort it into tax, social, or savings; get your W-4 or tax code right so you neither lend the government money free nor face a bill; capture the full retirement match; and only then look at what is genuinely left, because that surplus, not your headline salary, is what builds the corpus in India.

Related guides

• Sending your first salary home
• First-month-abroad money setup
• The moving-abroad financial checklist
• Expat budgeting in your first year
• Negotiating an expat package
• Cost of living: US, UK, UAE and India compared
• Social security and totalisation agreements
• Tax equalisation explained for expats
• Moving to Dubai for work
• Moving to the US for work
• Moving to the UK for work
• Moving to Canada for work
• NRI residency and RNOR rules
• DTAA relief for NRIs
• Retirement planning across two countries

This guide is educational and general in nature. It is not individual tax, payroll or financial advice. Tax rates, brackets, contribution limits, wage bases and thresholds change every tax year and differ by state, province and personal circumstances, and the figures here reflect the 2025/26 and 2026 positions current at the time of writing. Confirm your own deductions against your actual payslip and your country's official guidance, and consult a qualified tax adviser in your country of residence and a chartered accountant in India before acting on anything that affects your cross-border tax position.