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:
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:
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 Amy'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
Jun 06, 23 07:32 AM
May 01, 23 07:00 AM