• Pocket Flow Team • 12 min read
Ever looked at your paycheck and wondered where all the money went? You're not alone. Understanding how to calculate take-home pay is crucial for budgeting, comparing job offers, and making informed financial decisions. This comprehensive guide breaks down the exact formula with real-world examples.
See what you'll actually take home
⚠️ This is a simplified estimate. Get an exact calculation with deductions, credits, and more.
Get Exact Results (Free, 2 Minutes) →No credit card • IRS Publication 15-T • All 50 states
Take-home pay (also called net pay) is the amount you actually receive in your bank account after all taxes and deductions are subtracted from your gross pay. While your salary might be $60,000/year, you definitely won't see $60,000 hit your account.
Here's the exact calculation your employer (and payroll software) uses:
Net Pay = Gross Pay
- Federal Income Tax
- FICA (Social Security + Medicare)
- State Income Tax
- Local Taxes (if applicable)
- Pre-Tax Deductions (401k, HSA, etc.)
- Post-Tax Deductions (Roth 401k, etc.)Let's break down each component with specific numbers.
Gross pay is your total earnings before any deductions. Calculate it based on your pay structure:
Divide your annual salary by the number of pay periods:
Example: $60,000 salary, paid bi-weekly
$60,000 ÷ 26 = $2,307.69 gross pay per paycheck
Multiply your hourly rate by hours worked:
Hourly rate × Hours worked = Gross pay Example: $25/hour × 80 hours = $2,000 gross pay
Overtime: Hours over 40/week typically pay 1.5× or 2× your regular rate (varies by state and employer).
Federal tax is calculated using IRS Publication 15-T (2025). The amount depends on:
| Income Range | Tax Rate |
|---|---|
| $0 – $11,550 | 10% |
| $11,551 – $46,950 | 12% |
| $46,951 – $100,525 | 22% |
| $100,526 – $191,675 | 24% |
| $191,676 – $243,725 | 32% |
| $243,726 – $609,350 | 35% |
| $609,351+ | 37% |
Important: Tax brackets are marginal, not flat. You only pay the higher rate on income above each threshold.
For a $60,000 salary (single filer, standard W-4):
FICA (Federal Insurance Contributions Act) is fixed at 7.65% of gross pay:
Example: $2,307.69 gross pay (bi-weekly)
Social Security: $2,307.69 × 6.2% = $143.08 Medicare: $2,307.69 × 1.45% = $33.46 Total FICA: $143.08 + $33.46 = $176.54
State tax varies dramatically by location. Here's a quick reference:
Use our calculator for your specific state.
These reduce your taxable income before taxes are calculated, which lowers your overall tax burden:
Example: $500/paycheck to 401(k)
Gross pay: $2,307.69 - 401(k): -$500.00 Taxable income: $1,807.69 Federal tax calculated on $1,807.69 instead of $2,307.69 Savings: ~$110 in federal tax per paycheck
These come out after taxes are calculated:
Different taxes use different definitions of “taxable wages.” Knowing which deductions reduce which tax base is the key to predicting your paycheck accurately.
| Deduction | Federal | Social Security | Medicare |
|---|---|---|---|
| Traditional 401(k)/403(b)/457(b) | Yes | No | No |
| Roth 401(k) | No | No | No |
| Medical/Dental/Vision (Sec. 125) | Yes | Yes | Yes |
| HSA via payroll (Sec. 125) | Yes | Yes | Yes |
| FSA (healthcare/dependent care) | Yes | Yes | Yes |
| Commuter (transit/parking, up to limits) | Yes | Yes | Yes |
Notes: State tax treatment varies. Section 125 refers to “cafeteria plan” pre‑tax payroll deductions. Traditional 401(k) deferrals are subject to FICA even though they reduce federal income tax.
Gross Pay: $2,307.69 Pre-Tax Deductions: 401(k): -$500.00 Health Insurance: -$100.00 Taxable Income: $1,707.69 Federal Income Tax: -$180.00 (10.5% effective) FICA (7.65%): -$176.54 State Tax (CA, ~5%): -$85.38 Net Pay (before post-tax): $1,265.77 Post-Tax Deductions: $0.00 FINAL TAKE-HOME PAY: $1,265.77
Assumption for this example: the $100 health insurance is treated as post‑tax to keep numbers simple, so FICA is computed on the full $2,307.69. If your health premium is pre‑tax under a Section 125 plan (common), FICA would be computed on $2,207.69 instead, lowering your FICA amounts slightly and increasing take‑home pay.
Gross Pay: $2,307.69 Pre-Tax Deductions: 401(k): -$500.00 Health Insurance: -$100.00 Taxable Income: $1,707.69 Federal Income Tax: -$180.00 FICA (7.65%): -$176.54 State Tax (TX): $0.00 ✓ Net Pay: $1,351.15 FINAL TAKE-HOME PAY: $1,351.15
Difference: Texas residents keep $85.38 more per paycheck ($2,220/year) compared to California on the same $60,000 salary.
When someone says "I make $60,000," that's gross pay. Your actual spending power is your net pay (~$33,000-40,000 depending on state/deductions).
Cities like New York City, San Francisco, and Philadelphia have additional local income taxes (1-4%). Always check your local tax requirements.
Contributing to a 401(k) or HSA reduces your taxable income. A $500 401(k) contribution doesn't reduce your paycheck by $500—it reduces it by ~$350 after tax savings.
Life changes (marriage, kids, second job) affect your withholding. An outdated W-4 can mean a surprise tax bill or unnecessarily small paychecks.
| Salary | No-Tax State | Low-Tax State | High-Tax State |
|---|---|---|---|
| $40,000 | ~78% | ~74% | ~69% |
| $60,000 | ~74% | ~70% | ~65% |
| $80,000 | ~71% | ~67% | ~62% |
| $100,000 | ~68% | ~64% | ~58% |
*Assumes single filer, standard deductions, no additional withholdings
Our calculator uses IRS Publication 15-T (2025) and official state tax tables for accuracy:
Create a free account to save calculations and track historical data.
Use the formula above with the 2025 tax brackets and your state's tax rate. Good for understanding the math, but time-consuming for accuracy.
If you have access to your employer's payroll portal (ADP, Paychex, Gusto), you can usually see a breakdown of your current paycheck deductions.
Most people underestimate the impact of FICA (7.65%) plus federal (10-37%) plus state (0-13%) taxes. Combined, these can reduce your paycheck by 25-50%.
No, but it might feel like it. Overtime hours are taxed at your regular marginal rate. However, if overtime pushes you into a higher tax bracket, that portion is taxed at the higher rate (which is how brackets work).
Be careful. More allowances = less withheld = bigger paychecks now, but you might owe money at tax time. Aim to break even (owe ~$0, refund ~$0) by filling out your W-4 accurately.
Bonuses are often withheld at 22% federal rate (or your marginal rate if higher). The actual tax you owe is determined when you file your return.
Contributing to a traditional 401(k) or HSA reduces your taxable income:
If you're remote or considering relocation, moving to a no-tax state can save thousands:
Use the IRS W-4 calculator to dial in your withholding. Aim for a $0 refund (keeping more money throughout the year rather than lending it interest-free to the IRS).
Use our free calculator above to see your exact net pay based on your salary, state, and deductions. No credit card required, works for all 50 states, and includes 2025 tax tables.
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