Net Salary Calculator

How is net salary calculated?

Net salary is the amount left in your pocket from gross salary after deducting income tax and mandatory side costs. In the US, from an employee's gross salary, three main items are deducted: federal income tax, Social Security tax, and Medicare tax.

Income tax

Income tax in the US is progressive. The tax rate depends on your annual income, filing status, and state. Typical effective tax rate for employees varies around 15–30%. You can check your tax rate on your W-2 or in your tax return.

Social Security tax

Social Security tax is a mandatory retirement insurance contribution that funds your future retirement. In 2024, the employee share is 6.2% of gross salary up to $168,600.

Medicare tax

Medicare tax funds healthcare for retirees. In 2024, the employee share is 1.45% of all gross salary.

Example

Assume gross salary is $4,000/month and tax rate 25%:

• Income tax: $4,000 × 25% = $1,000
• Social Security: $4,000 × 6.2% = $248
• Medicare: $4,000 × 1.45% = $58
• Net salary: $4,000 − $1,000 − $248 − $58 = $2,694

Why use a net salary calculator?

A net salary calculator helps you understand your pay stub details and plan your finances. It is especially useful in job searches when you want to compare the real value of different offers. The calculator also suits employers estimating employee payroll costs.

Sources:

• IRS – Tax Information
• SSA – Social Security
• Medicare – Healthcare