Take Home Pay Calculator

Your take-home pay (net pay) is derived from your gross income through a series of deductions applied in a specific order. Understanding this process helps you plan your budget and optimize your paycheck.

Step 1: Start with Gross Pay

For salaried employees, this is your annual salary divided by the number of pay periods. For hourly workers, it is your hourly rate multiplied by hours worked per week, then annualized.

Step 2: Subtract Pre-Tax Deductions

Pre-tax deductions such as traditional 401(k) contributions, HSA contributions, and employer-sponsored health insurance premiums are subtracted from gross pay before taxes are calculated. These reduce your taxable income, which means you pay less in federal and state income taxes.

Step 3: Calculate Federal Income Tax

Federal income tax is calculated using progressive tax brackets based on your filing status. After applying the standard deduction ($15,000 for single, $30,000 for married filing jointly in 2025), your remaining taxable income is taxed at increasing rates from 10% to 37%.

Step 4: Calculate State and Local Taxes

Most states impose their own income tax using either flat rates or progressive brackets. Nine states (AK, FL, NV, NH, SD, TN, TX, WA, WY) have no state income tax. Some cities, like New York City, impose an additional local income tax.

Step 5: Calculate FICA Taxes

FICA taxes fund Social Security (6.2% on earnings up to $168,600) and Medicare (1.45% on all earnings, plus an additional 0.9% on earnings above $200,000 for single filers). These are calculated on gross wages, not reduced by most pre-tax deductions.

Step 6: Subtract Post-Tax Deductions

Post-tax deductions such as Roth 401(k) contributions are taken from your pay after taxes have been calculated. These do not reduce your current tax bill but offer tax-free withdrawals in retirement.

Step 7: Your Take-Home Pay

The remaining amount after all taxes and deductions is your take-home pay -- the actual amount deposited into your bank account each pay period.