How to Calculate Your Take-Home Pay Step by Step
A step-by-step guide to estimating your net take-home pay by working through federal taxes, FICA, state taxes, and common deductions.
Start With Your Gross Annual Salary
Your starting point is your gross annual salary — the total compensation your employer agreed to pay you before any deductions. If you are paid bi-weekly, divide by 26 to get your gross pay per paycheck. If paid semi-monthly, divide by 24. If paid weekly, divide by 52. If paid monthly, divide by 12.
For hourly employees, multiply your hourly rate by the hours you expect to work per pay period. Include any regular overtime if applicable. Bonuses and commissions may add to your paycheck but are not always predictable, so start your calculation with base compensation.
Write down this gross per-paycheck amount. Every subsequent step will reduce it. The final number is your estimated net pay — what actually arrives in your bank account.
Subtract Your Pre-Tax Deductions
Pre-tax deductions reduce your gross pay before taxes are calculated, which lowers your taxable income and therefore your withholding. Common pre-tax deductions include your employee contribution to health, dental, and vision insurance premiums, contributions to a traditional 401(k) or 403(b) retirement plan, contributions to a Health Savings Account (HSA), and contributions to a Flexible Spending Account (FSA).
Find the per-paycheck dollar amount for each of these deductions on your benefits enrollment documents or your most recent pay stub. Subtract the total of all pre-tax deductions from your gross pay to get your adjusted gross pay. This is the amount that federal and state income tax withholding will be calculated on.
For example, if your gross bi-weekly pay is $2,500 and you have $150 in health insurance premiums and $200 in 401(k) contributions per paycheck, your adjusted gross pay for tax purposes is $2,500 minus $350, which equals $2,150.
Calculate Federal Income Tax
Federal income tax withholding is calculated based on your adjusted gross pay, your filing status (single, married filing jointly, or head of household), and the allowances or adjustments you claimed on your W-4 form. The IRS Publication 15-T provides tax withholding tables that employers use to determine the exact withholding amount.
For a rough estimate, you can use your expected annual taxable income and marginal bracket rate. If your bi-weekly adjusted gross pay is $2,150, annualize it by multiplying by 26 to get $55,900. Subtract the standard deduction ($14,600 for single filers in 2024) to get approximate taxable income of $41,300. Apply the bracket rates: 10% on the first $11,600 ($1,160) and 12% on the remaining $29,700 ($3,564), totaling roughly $4,724 annual tax. Divide by 26 pay periods for approximately $182 per paycheck.
This is a simplified estimate. Your actual withholding depends on the specific W-4 choices you made, including any additional withholding you requested or any adjustments for other income or deductions.
Calculate FICA Taxes
FICA taxes are calculated on your gross earnings before pre-tax deductions in most cases (with some exceptions for certain types of benefits). Social Security is 6.2% of wages up to the annual wage base ($168,600 in 2024). Medicare is 1.45% on all wages with no cap.
Using the example above with $2,500 gross bi-weekly pay: Social Security is $2,500 times 0.062, which equals $155. Medicare is $2,500 times 0.0145, which equals $36.25. Total FICA is $191.25 per paycheck.
Unlike income tax withholding, FICA is not affected by your W-4 or filing status. Every employee pays the same flat FICA rates on the same wage base. The only variation is if your employer offers certain specific pre-tax benefit plans that are exempt from FICA.
Add State Tax and Divide by Pay Periods
State income tax withholding varies by state. Nine states have no state income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. For employees in the other states, look up your state's current withholding rate and apply it to your adjusted gross pay per paycheck.
Most states have progressive brackets similar to federal tax, though rates and thresholds vary. A simple estimate is to multiply your per-paycheck adjusted gross pay by your state's average effective rate for your income level, though using your state tax authority's withholding calculator produces a more accurate result.
To find your estimated net pay, subtract all withholdings and deductions from your gross pay: gross pay minus pre-tax deductions minus federal income tax minus Social Security minus Medicare minus state income tax minus any post-tax deductions like Roth 401(k) contributions or additional voluntary deductions. The result is your estimated net take-home pay per paycheck.