When you see your salary offer or hourly wage, it rarely reflects the money that actually lands in your bank account. That’s because your take-home pay—sometimes called net pay—is what remains after taxes and other deductions are withheld. Understanding how to calculate it helps you budget better and avoid surprises when payday arrives.
What Does “Take-Home Pay” Mean?
Take-home pay is the portion of your earnings you actually keep after mandatory and voluntary deductions are taken out.
- Gross pay = your full salary or hourly wage before deductions.
- Net pay (take-home) = gross pay minus taxes and other withholdings.
Think of gross pay as the starting point, and net pay as the real amount you can spend or save
Common Deductions From a Paycheck
1. Pre-Tax Deductions
These lower your taxable income before taxes are applied:
- 401(k) or 403(b) retirement contributions
- Health, dental, and vision insurance premiums
- Health Savings Account (HSA) or Flexible Spending Account (FSA) contributions
2. Taxes
- Federal income tax: Based on IRS tax brackets and your W-4 selections
- FICA: Social Security (6.2% up to an annual limit) + Medicare (1.45%, plus 0.9% extra for high earners)
- State and local taxes: Varies widely—0% in states like Texas, higher progressive rates in places like California or New York
3. Post-Tax Deductions
These come out after taxes are applied:
- Roth IRA contributions
- Union dues
- Wage garnishments
- Charitable contributions through payroll
Step-by-Step: How to Estimate Your Take-Home Pay
- Start with gross pay (salary ÷ pay periods or hourly rate × hours worked).
- Subtract pre-tax deductions (like retirement or health insurance).
- Subtract federal income tax (check the 2025 IRS withholding tables).
- Subtract FICA taxes (Social Security + Medicare).
- Subtract state and local income taxes if applicable.
- Subtract post-tax deductions (like union dues).
✅ What remains is your take-home pay.
Example: Biweekly Paycheck
- Gross pay: $2,000
- Pre-tax 401(k) contribution: –$100 → taxable income = $1,900
- Federal withholding (approx.): –$180
- Social Security (6.2%): –$118
- Medicare (1.45%): –$27.55
- State tax (say 5%): –$95
- Union dues (post-tax): –$20
👉 Take-home pay = ~$1,459.45
Why Take-Home Pay Matters
- Helps you budget realistically instead of relying on gross salary.
- Shows how pre-tax savings (401k, HSA) can reduce taxable income.
- Helps identify if your W-4 settings need adjusting to avoid owing taxes at year-end.
FAQs
1. How do pre-tax deductions affect my paycheck?
They lower your taxable income, which means you pay less in federal and state income tax.
2. Do all states have income tax?
No. Nine states—including Florida and Texas—do not tax income, which increases your take-home pay.
3. What percentage of my paycheck goes to FICA?
7.65% for most workers (6.2% Social Security + 1.45% Medicare).
4. Why does my paycheck vary?
Changes in overtime, bonuses, or benefit contributions can shift your taxable income and net pay.
5. Can I increase my take-home pay?
Yes—by adjusting W-4 allowances, contributing to pre-tax accounts, or living in a state with no income tax.
Bettye is the creator of CityPaycheckCalculator.com, a resource designed to help individuals quickly and accurately estimate their take-home pay across U.S. cities. With a strong focus on clarity, accuracy, and user experience, Bettye provides reliable paycheck calculators and helpful insights to support smarter financial decisions. Her mission is to make complex payroll and tax information simple and accessible for everyone.