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How to Calculate Take-Home Pay After Taxes

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When employers tell you how much money they will be paying you, they always quote your gross pay.To figure out how much money will hit your bank account every pay day, you need to know how to calculate your take-home pay after taxes.

Figure out your gross pay. If you get paid by the hour, this is equal to your hourly rate times the number of hours you worked in a pay period. If you are a salaried employee, this will be your yearly salary divided by the number of pay periods in a year.

Subtract what you pay in federal taxes. How much you pay into federal taxes will depend on whether you are married or single, how many allowances you claim and what tax bracket you are in.

Subtract the amount you pay in state taxes. Each state has different tax rates, and some states do not withhold taxes at all. If your state does withhold taxes, the amount will depend on your marital status and how many allowances you claim.

Subtract any local earnings taxes from your gross pay. Some cities impose an earnings tax on anyone who lives or works within the city limits.

Multiply your gross pay by 4.2 percent, which is what you pay into Social Security, as of 2011. Subtract that number from your gross pay.

Multiply your gross pay by 1.45 percent, which is the amount you pay into Medicare, as of 2011. Subtract that number from your gross pay.

Tip

You can find many free take-home pay calculators online. Whether you calculate your take-home pay by hand or you use the Internet, the number you arrive at may not be exact. Things like exempt earnings and overtime pay may skew your results.

References

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