Net Pay
Use the Net Pay Calculator →What is Net Pay?
Net pay, also called take-home pay, is the amount deposited into your bank account after all deductions are removed from gross pay. Mandatory deductions include federal income tax, state income tax (where applicable), Social Security (6.2% up to the wage base), and Medicare (1.45%). Voluntary deductions include health insurance premiums, dental, vision, 401k contributions, and HSA contributions.
Net pay is the figure that matters for day-to-day budgeting. It is always lower than gross pay - sometimes significantly so. For a $60,000 annual salary, net pay for a single filer in a median-tax US state is typically $42,000-$46,000 per year, or $1,600-$1,770 bi-weekly.
When to use Net Pay
Use net pay for monthly budgeting, rent-to-income calculations, and savings planning. Use gross pay for comparing job offers and calculating your market hourly rate.
Common pitfalls
Do not confuse net pay with disposable income. Net pay is after tax and statutory deductions, but you may still have fixed expenses (rent, car payment, loan repayments) that reduce what is truly discretionary.
Frequently asked questions
How do I calculate my net pay from gross pay?
Start with gross pay, subtract federal income tax (based on your bracket and W-4 allowances), Social Security (6.2%), Medicare (1.45%), state income tax, and any voluntary deductions (health insurance, 401k). The remainder is your net pay. A paycheck stub shows each deduction line by line.
Does a higher 401k contribution reduce my net pay?
Yes - traditional 401k contributions reduce your taxable income, which lowers your federal and state income tax. The net effect on take-home pay is less than the contribution amount. Contributing $200 bi-weekly may only reduce net pay by $140-$160 depending on your marginal tax rate.