1. What is Net Salary?

Net salary, often called take-home pay, is the amount an employee receives after all deductions including taxes, insurance, and retirement contributions have been subtracted from the gross salary.

2. How Does the Calculator Work?

The calculator uses the net salary formula:

Where:

• Gross Salary — Total earnings before any deductions
• Federal Tax — Income tax withheld for federal government
• State Tax — Income tax withheld for state government
• FICA — Social Security and Medicare taxes (7.65% of gross pay typically)

Explanation: The equation calculates how much money you actually take home after mandatory tax deductions.

3. Importance of Net Salary Calculation

Details: Understanding your net salary helps with budgeting, financial planning, and ensuring proper tax withholding amounts.

4. Using the Calculator

Tips: Enter your gross annual salary and estimated tax amounts. For most employees, FICA is 7.65% of gross pay (6.2% for Social Security and 1.45% for Medicare).

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between gross and net salary?
A: Gross salary is your total earnings before deductions, while net salary is what you actually receive after all deductions.

Q2: How can I reduce my tax burden?
A: Contributing to retirement accounts (401k, IRA), HSAs, and taking advantage of tax credits can reduce taxable income.

Q3: Why is my net pay less than I calculated?
A: Other deductions like health insurance, retirement contributions, or wage garnishments may also be withheld from your paycheck.

Q4: Are state taxes the same everywhere?
A: No, some states have no income tax (e.g., Texas, Florida), while others have progressive tax structures like the federal system.

Q5: What if I'm self-employed?
A: Self-employed individuals pay both employee and employer portions of FICA (15.3% total) and must make quarterly estimated tax payments.