How to Calculate Take-Home Pay After Taxes

When employers tell you how much money they will be paying you, they always quote your gross pay. In order to figure out how much money will hit your bank account every pay day, you need to know how to calculate your take-home pay after taxes.

Things You'll Need

• Your pay stub
• A calculator

Instructions

1. Start with your gross pay. If you get paid by the hour, this is equal to your hourly rate times the number of hours you worked in a pay period. If you are a salaried employee, this will be your yearly salary divided by the number of pay periods in a year.

2. Subtract what you pay into federal, state, and local taxes. How much you pay into federal taxes will depend on whether you are married or single, how many allowances you claim, and what tax bracket you are in. Each state has different tax rates, and some states do not withhold taxes at all. If your state does withhold taxes, the amount will depend on your marital status and how many allowances you claim. Do not forget to subtract any extra money that you voluntarily withhold for taxes as well.

3. Subtract how much you pay into Social Security and Medicare. You pay Social Security 6.2% of your gross pay, and you pay Medicare 1.45% of your gross pay.

4. Subtract any other deductions. Examples include (but are not limited to) 401K contributions, payments for health insurance plans, and payments for disability insurance.

Tips & Warnings

• You can find many free take-home pay calculators online.

• Whether you calculate your take-home pay by hand or you use the internet, the number you arrive at may not be exact. Things like exempt earnings and overtime pay may skew your results.