How to Calculate Take-Home Pay
Take-home pay is not gross pay minus one tax rate. Subtract pre-tax deductions first, then apply federal and state income tax and FICA, and only then divide by pay periods. This guide walks through the order.
Step 1: Find taxable income
Taxable income = annual gross minus pre-tax deductions. 401(k), HSA and some health premiums reduce income tax and, depending on the plan, FICA.
Roth contributions and most reimbursements are after-tax and do not reduce current taxable income.
Step 2: Separate income tax from FICA
Federal and state income tax each apply to taxable income at your expected effective rate; using the top marginal rate overstates the tax.
FICA is 6.2 percent Social Security plus 1.45 percent Medicare; Social Security applies only up to the annual wage base, 176,100 dollars for 2025.
Step 3: Divide by pay periods
Annual net divided by 12 is a monthly average, not a paycheck. Biweekly pay has 26 periods, so each check is annual net divided by 26.
Bonuses and supplemental wages follow different withholding rules.
FAQ
Why is this different from my pay stub?
This uses flat effective rates; a real stub also reflects credits, additional taxes, local tax and the wage-base cap.
What counts as a pre-tax deduction?
Use annual 401(k), HSA and qualifying health premiums; check the year-to-date pre-tax line on your pay stub.