Calculate take home pay

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

Take home 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

A few examples showing how to calculate take home pay

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 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

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