How to Calculate Take-Home Pay from Your Salary

Your gross salary is what the offer letter says. Your take-home pay is what actually lands in your account. The gap is rarely small — for a middle-income earner in a tax state, it's often 25–35% of gross. Here's the pipeline from one to the other.

The gross → net pipeline

Money is subtracted in a specific order, and the order matters because pre-tax deductions reduce your taxable income:

1. Gross pay
2. − Pre-tax deductions (traditional 401(k), HSA, some health insurance premiums)
3. = Taxable income for federal + state
4. − Federal income tax (marginal brackets)
5. − State income tax (flat or bracketed depending on state)
6. − FICA = 6.2% Social Security + 1.45% Medicare = 7.65% on gross (not on the taxable amount)
7. − Post-tax deductions (Roth 401(k), garnishments)
8. = Take-home pay

Worked example: $70,000 salary

Single filer, contributing 5% to a traditional 401(k), $2,400/year for health insurance (pre-tax), living in a 5% flat-tax state.

Step 1 — Pre-tax deductions.

• 401(k) 5% × $70,000 = $3,500
• Health insurance = $2,400
• Total pre-tax = $5,900
• Federal/state taxable wages = $70,000 − $5,900 = $64,100

Step 2 — Federal income tax (2025 single brackets, $15,000 standard deduction).

Taxable after standard deduction: $64,100 − $15,000 = $49,100

• 10% × $11,925 = $1,193
• 12% × ($48,475 − $11,925) = $4,386
• 22% × ($49,100 − $48,475) = $138
• Federal tax ≈ $5,717

Step 3 — State tax. 5% × $64,100 = $3,205

Step 4 — FICA. 7.65% × $70,000 (FICA is on gross, not taxable) = $5,355

Step 5 — Add it up.

That's a 71% take-home ratio — typical for a middle-income worker in a moderate-tax state contributing modestly to retirement. The Take-Home Pay Calculator runs the whole pipeline for any salary, filing status, and state. For a federal-tax-only breakdown, use the Income Tax Calculator.

Marginal vs effective rate

The worker above is in the 22% marginal bracket — the next dollar of raise is taxed at 22% federal. But their effective federal rate is only $5,717 ÷ $70,000 = 8.2%. Marginal rate is what applies to the *next* dollar; effective rate is what you actually paid on average. Confusing the two is why people say "I don't want a raise, it'll push me into a higher bracket" — a misunderstanding, since only the dollars *inside* the higher bracket are taxed at the higher rate.

Paycheck frequency

The total is the same whether you're paid weekly, biweekly, or monthly — but the per-check number differs, and biweekly means 26 paychecks per year, not 24. Two months of the year contain three biweekly paychecks. Budget monthly against 26/12 = 2.17 paychecks/month, not 2.

Pre-tax deductions are worth more than they look

That $3,500 pre-tax 401(k) contribution didn't cost $3,500 of take-home. At the 22% marginal + 5% state = 27% combined rate, it cost roughly $3,500 × (1 − 0.27) = $2,555 out of pocket — the government funds the other $945 by not taxing it. Same logic applies to HSAs (with an additional FICA saving) and traditional IRAs.

FAQ

How much of my salary do I take home? For most US workers, 65–75% of gross depending on state, filing status, and pre-tax deductions. Higher earners with maxed pre-tax contributions and no state tax can push above 80%; workers in high-tax states can drop below 65%.

Do 401(k) contributions reduce my taxable income? Traditional 401(k) contributions reduce federal and (usually) state taxable income but not FICA. Roth 401(k) contributions don't reduce current taxable income.

Why is FICA taken from my gross and not my taxable income? Social Security and Medicare are payroll taxes, not income taxes — they apply to wages before any income-tax deductions. Only the Additional Medicare Tax and Social Security wage cap adjust the calculation at higher incomes.

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*See your exact number with the free Take-Home Pay Calculator — supports every state, filing status, and pre-tax deduction.*