From gross to net: where your pay goes
Net pay is what remains after the layers between your salary and your bank account have each taken a share. The calculator works in order: first it removes pre-tax deductions — 401(k), HSA, and health premiums — because they come out before tax is figured. It then applies FICA at 7.65 percent, respecting the Social Security wage-base cap so earnings above that threshold are not double-charged. Finally it applies an estimated income-tax rate to the pay that remains, and reports your net figure across the year, the month, and the biweekly pay period. The gap between gross and net surprises almost everyone the first time they see it spelled out — a useful framing is that your offer letter is in gross while your bank account is in net.
The take-home formula
Taxable pay = Gross − Pre-tax deductions
Net pay = Taxable pay − FICA − Federal tax − State tax
where FICA is 7.65 percent (Social Security plus Medicare, with Social Security capped at the annual wage base),federal tax comes from the IRS brackets and standard deduction for your filing status, and state tax uses an editable rate prefilled from your state. This is still anestimate: your real paycheck also depends on local and city taxes, itemized or state-specific deductions, credits, and post-tax deductions, so fine-tune the inputs for the best result.
Worked example
Take a single filer in California earning $80,000 a year, contributing $5,000 to pre-tax accounts. Here is exactly where the money goes for tax year 2026:
| Step | Amount |
|---|---|
| Gross annual salary | $80,000 |
| − Pre-tax deductions401(k) contributions and health premiums | $5,000 |
| − FICA6.2% Social Security (up to the $184,500 wage base) + 1.45% Medicare | $6,120 |
| − Federal income tax2026 single brackets on $58,900 taxable income, after the $16,100 standard deduction | $7,670 |
| − California state taxfrom California's 2025 brackets (latest published) — an effective rate of 3.9% | $2,928 |
| = Take-home payabout $4,857 a month — 72.85% of gross | $58,282 |
Computed with this calculator's default settings — open the tool above and you'll see the same numbers, then change any input to match your own situation.
Why pre-tax deductions cost less than they look
Pre-tax deductions such as 401(k) contributions, HSA contributions, and health-insurance premiums lower both your taxable income and the cash you take home — but the money is not gone. It funds your retirement, your medical savings, or your coverage. Because the contribution also shrinks the income that gets taxed, the reduction in take-home pay is smaller than the amount you set aside: part of that money would have been lost to tax anyway. This is exactly why maxing out pre-tax contributions costs less in take-home terms than the contribution figure suggests, and why building those deductions into your plan is rarely as painful as it first appears.
To break the picture into its pieces, see how payroll taxes alone stack up with ourFICA tax calculator, estimate the tax layer on its own with theincome tax calculator, or work the other direction — from an hourly or annual figure — using thesalary calculator.
Frequently asked questions
How do I calculate take-home pay?
Start with your gross pay, then subtract everything that comes out before the money reaches your bank account. First remove pre-tax deductions such as 401(k) contributions, HSA contributions, and health-insurance premiums. From what remains, subtract FICA — 7.65 percent for Social Security and Medicare, with Social Security applying only up to the annual wage base. Then subtract federal income tax, which this calculator works out from the IRS brackets and standard deduction for your filing status, plus any state income tax. What is left is your take-home, or net, pay.
Why is my paycheck so much less than my salary?
A salary is quoted in gross terms — the full amount before anything is withheld. Your paycheck reflects net pay, which is what survives after FICA, federal income tax, any state and local taxes, and your pre-tax deductions. Those layers can easily remove a quarter to a third of gross pay, which is why the number on your offer letter and the number in your bank account feel so far apart. A useful framing is that your offer letter is in gross while your bank account is in net.
What is the difference between gross and net pay?
Gross pay is your total compensation before any deductions — the headline figure in an offer or salary agreement. Net pay is what is actually deposited after taxes and deductions are taken out. The gap between the two is made up of FICA, income tax, and any pre-tax or post-tax deductions. Understanding both numbers matters because budgeting works on net pay, while raises, comparisons, and benefits are usually discussed in gross.
Do pre-tax deductions reduce my take-home pay?
Yes, they reduce the cash that lands in your account, but the money is not lost — it funds your retirement account, health savings, or insurance. Because pre-tax contributions also lower your taxable income, the hit to take-home is smaller than the contribution itself: a portion of what you set aside would otherwise have gone to tax. That is why maxing out pre-tax contributions typically costs you less take-home pay than the headline contribution amount.
How accurate is this estimate?
Treat the result as a careful estimate rather than an exact paycheck. Federal income tax is computed from the current IRS brackets and the standard deduction for your filing status, FICA is applied with the Social Security wage-base cap, and state tax uses an editable rate prefilled from your state. Real paychecks can still differ because of local and city taxes, itemized or state-specific deductions, tax credits, and post-tax deductions, none of which a simplified model captures perfectly. For the closest result, fine-tune the state rate and pre-tax deductions to match a recent return or pay stub.
Sources
- IRS — Federal income tax rates and brackets
- IRS Topic 751 — Social Security and Medicare withholding rates
- SSA — Contribution and benefit base (Social Security wage base)
- California FTB — Tax calculator, tables, and rates
The official figures this page quotes are drawn from the primary sources above — check them (or a qualified professional) before relying on a result.
Disclaimer: This calculator is foreducation and illustration only. It applies FICA, the IRS federal brackets and standard deduction for your filing status, and an editable state rate to pay after pre-tax deductions. It does not account for local and city taxes, itemized or state-specific deductions, credits, or post-tax deductions, and tax law changes yearly. The figures it produces are estimates, not a guarantee of your actual paycheck. Nothing here is financial, tax, or legal advice.