Gross vs net, withholding, deductions and take-home pay.
Your paycheck is rarely the salary you were quoted. A series of taxes and deductions stand between gross pay and what lands in your account. This guide explains each piece.
Gross pay is your total earnings before anything is taken out; net pay (take-home) is what remains after taxes and deductions. The gap is often 20 to 35 percent. The Paycheck Calculator estimates your take-home from gross pay and filing details, and the Net Pay Calculator breaks down exactly what's withheld.
Three categories come out of most paychecks: federal income tax (based on your W-4 and bracket), FICA (Social Security at 6.2 percent up to the annual wage base, plus Medicare at 1.45 percent), and state and local income tax where applicable. Several states have no income tax, which raises take-home noticeably.
Contributions to a 401(k), traditional IRA, HSA, or employer health premiums often come out before taxes, shrinking your taxable income. A dollar saved in a pre-tax 401(k) costs you less than a dollar of take-home pay, because you avoid tax on the contributed amount now.
Converting between an annual salary and an hourly rate trips people up because of pay-period frequency (weekly, biweekly, semimonthly, monthly). The Salary Converter handles the conversion both ways. A biweekly schedule produces 26 paychecks a year, not 24. Two months each year contain a third check.
A pay stub shows gross, each tax and deduction, and net pay for both the current period and year-to-date. Checking it periodically catches errors: wrong withholding allowances, missed deductions, or incorrect overtime. If your refund or balance due at tax time is consistently large, adjusting your W-4 brings withholding closer to what you actually owe.
Federal income tax, FICA (7.65%) and any state tax plus deductions typically take 20 to 35 percent.
Social Security (6.2% up to the wage base) plus Medicare (1.45%) payroll taxes.
401(k), HSA and similar contributions lower your taxable income, reducing tax owed.
Biweekly pay yields 26 checks a year, so two months have a third check.
Update your W-4 with your employer to align withholding with what you actually owe.