How to Calculate Your Take-Home Pay (After Taxes)
4 min read
Your salary and your paycheck are two different numbers. Gross pay is what you earn; take-home (net) pay is what actually lands in your account after taxes and deductions. Knowing the difference helps with budgeting and job offers.
Here is how to calculate your take-home pay from a gross salary.
Step by step
- 1Start with gross pay
Begin with your gross pay for the period - annual salary, or hourly rate times hours worked.
- 2Subtract pre-tax deductions
Remove pre-tax items like 401(k) contributions and health insurance premiums first - they lower the income that gets taxed.
- 3Subtract federal income tax
Federal tax is progressive, applied in brackets based on your taxable income and filing status. Only the income within each bracket is taxed at that bracket's rate.
- 4Subtract FICA and state tax
FICA takes 6.2% for Social Security (up to the annual wage cap) and 1.45% for Medicare. Add any state and local income tax, which varies widely - some states have none.
- 5Estimate it instantly
Enter your salary and details in the Take-Home Pay Calculator to see the deductions and your estimated net pay.
Tips
- Pre-tax retirement contributions reduce your taxable income now, so they cost you less in take-home pay than the amount contributed.
- Moving into a higher tax bracket only taxes the income above the threshold at the higher rate - not your whole salary.
- This is an estimate; your actual withholding depends on your W-4, benefits, and local rules.
Frequently asked questions
What is the difference between gross and net pay?
Gross pay is your total earnings before deductions. Net (take-home) pay is what remains after taxes, FICA, and other deductions are subtracted.
What is FICA on my paycheck?
FICA is the payroll tax for Social Security (6.2%) and Medicare (1.45%), totaling 7.65% of wages, split between you and your employer.
Is the take-home pay number exact?
It is a close estimate. Exact withholding depends on your W-4 elections, pre-tax benefits, and state and local taxes.