Calculate take home pay

To calculate take home pay, just add all deductions and then subtract the total deductions from the gross pay.

Definition of take home pay: Also called net pay, the take home pay is the money that is left after all deductions have been subtracted from the gross pay.

Definition of deductions: All money taken away from your gross pay

Definition of gross pay: The amount of money paid to an employee before deductions

Take home pay = Gross pay - deductions

Example #1:

Steve is a computer programmer and he works 35 hours a week. Steve gets paid \$25 / per hour. Calculate take home pay

The following are deductions from Steve's paycheck:

Federal tax: \$130

State tax : \$25

Health insurance: \$80

Medicare tax: \$52

Disability: \$12

Union dues: \$21

First, calculate total deductions:

Total deductions = Federal tax + State tax + Health insurance + Medicare tax + Disability + Union dues

Total deductions = \$130 + \$25 + \$80 + 52 + \$12 + \$21

Total deductions = \$320

Second, calculate Steve's gross income:

Gross pay = Number of hours worked × rate

Here, the rate is how much you get paid per hour

Thus, gross pay = \$35 × \$25 = \$875

Take home pay = Gross pay - deductions

Take home pay = \$875 - \$320

Take home pay = \$555

Example #2:

Amy is a nurse and she works 52 hours a week. Amy gets paid \$50 / per hour for regular time and \$75 / hour for overtime

The following are deductions from Amy's paycheck:

Federal tax: \$150

State tax: \$54

City tax: \$24

Health insurance: \$100

Medicare tax: \$45

401k contribution: \$80

First, calculate total deductions:

Total deductions = Federal tax + State tax + City tax + Health insurance + Medicare tax + 401k contribution

Total deductions = \$150 + \$54 + \$24 + \$100 + \$45 + \$80

Total deductions = \$453

Second, calculate steve's gross income:

Gross pay = Number of hours worked × rate

Since Amy worked 52 hours, there is overtime pay.

Regular pay = \$40 × \$50

Regular pay = \$2000

Overtime pay = \$12 × \$75

Overtime pay = \$900

Gross pay = Regular pay + Overtime pay

Gross pay = \$2000 + \$900

Gross pay = \$2900

Take home pay = Gross pay - deductions

Take home pay = \$2900 - \$453

Take home pay = \$2447

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