Understanding Your Paycheck: Gross vs Take-Home

Understanding Your Paycheck: Gross vs Take-Home

An $80,000 salary doesn't put $80,000 in your pocket. Several deductions shrink it before you see a dime.

What comes out

Federal income tax is withheld from your brackets and filing status. FICA covers Social Security (6.2% up to a wage base) and Medicare (1.45%, plus an extra 0.9% on high earners). Most states take income tax too. Pre-tax deductions like a 401(k) lower taxable income.

Net pay is the number that counts

Net (take-home) pay is gross minus all of the above. Divide by 12 for monthly or 24 for semi-monthly, and that's the figure your budget should use — not your salary.

Our salary take-home calculator stacks federal, FICA, and state taxes onto your salary to show net pay per month and per paycheck. Use it when you negotiate or build a budget.

One thing people miss: contributing to a 401(k) or health insurance pre-tax lowers your taxable income and can actually raise your take-home compared with spending that same money after tax.