How to Figure Out How Much Someone Makes After Taxes

In order to figure your net income, subtract deductions.

An annual salary does not represent the amount you eventually deposit in your bank account. This is gross income. Net income, on the other hand, is the amount you take home after all withholdings. The largest withholding on any check will be federal and state taxes. There may be many other withholdings, though.

Things You'll Need

• W-2 form
• 3 pay checks
• Calculator

Instructions

1. Review your most recent paycheck. Look at the deductions listed on the check. The largest sum on the check is your year-to-date gross income. The second largest amount is your gross income for the pay period. The amount on the check--or deposited in your account--is your net income.

2. Calculate you tax withholding. Determine your current salary. This may be the amount listed on Box 1 on your W-2. If you received a raise, though, this number will be more. Calculate your federal tax withholding percentage using this figure. For example, if you are single and your total annual gross income is $95,000, you must pay 28 percent of that income to the IRS, according to the 2009 IRS.The tax brackets will change from year to year. In this example, a payment of $26,600 must be deducted from your gross salary. Therefore, $68,400 is your net income.

3. Figure your state withholding. This will be the same process as calculating your federal withholding, but the percentage withheld will depend on your state. Again, the amount withheld will likely be on your W-2, in Box 17. Review your state's Department of Revenue homepage to figure the total percentage withheld.

4. Deduct your Social Security withholding. According to the IRS, the Social Security withholding for 2009 and 2010 is 6.2 percent. Deduct this amount from your annual wages. This number should also be listed on your W-2 in Box 4.

5. Calculate your monthly withholdings to determine your monthly net income. Look at how you are paid. Double your gross monthly income (the amount deposited into your account or on your check) and double your deductions if you are paid biweekly. For example, if your net biweekly income is $1,340 and your biweekly withholdings are $312, you need to subtract $624 from $2,680. Your net monthly income is $2,056.

6. Verify your calculations using an online calculator. Make sure to account for any increases in deduction withholdings--such as additional 401(k) contributions--if they occur between pay periods.

References

• Investopedia: Net Income
• Bankrate: Net-to-Gross Paycheck Calculator

Resources

• IRS: Federal Tax Brackets