The formula
Net pay = gross pay − taxes − pre-tax deductions − post-tax deductions
Example: $60,000 salary, paid every two weeks, single, Texas
| Per paycheck | |
|---|---|
| Gross pay ($60,000 ÷ 26) | $2,307.69 |
| Federal income tax | −$193.08 |
| Social Security (6.2%) | −$143.08 |
| Medicare (1.45%) | −$33.46 |
| Net pay | $1,938.08 |
In a state with income tax (say California) net pay on the same salary is about $1,844.63 per paycheck.
Pre-tax vs post-tax deductions
Not everything between gross and net is tax:
| Type | Examples | Effect on taxes |
|---|---|---|
| Pre-tax | Traditional 401(k)/403(b), health premiums, HSA, FSA, commuter benefits | Lowers taxable wages, so you pay less income tax |
| Post-tax | Roth 401(k), union dues, garnishments, some life insurance | Taken after tax: no tax saving now |
That’s why a $100 pre-tax 401(k) contribution usually lowers your paycheck by only $70-$80: you save the income tax on it.
Annual vs per-paycheck
Divide annual gross by the number of paychecks: 52 (weekly), 26 (biweekly), 24 (semi-monthly) or 12 (monthly). For hourly pay, gross = hourly rate × hours, plus overtime at 1.5×.
Which number matters?
- Gross is what job offers, loan applications and rent requirements usually quote.
- Net is what you budget with.
Work out yours with the paycheck calculator.
