1. What is Net Income?

Net income, often called "take-home pay," is the amount of money remaining after all deductions (taxes, insurance, retirement contributions, etc.) have been subtracted from your gross income.

2. How Does the Calculator Work?

The calculator uses the following formula:

Where:

• Gross Income — Total earnings before any deductions
• Federal Tax — Federal income tax withheld
• MD State Tax — Maryland state income tax withheld
• FICA — Social Security and Medicare taxes (7.65% of gross income typically)

3. Importance of Net Income Calculation

Details: Understanding your net income helps with budgeting, financial planning, and determining your actual purchasing power after taxes.

4. Using the Calculator

Tips: Enter all values in dollars. For most accurate results, use values from your pay stub or tax documents.

5. Frequently Asked Questions (FAQ)

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

Q2: Are Maryland state taxes higher than other states?
A: Maryland has a progressive state income tax ranging from 2% to 5.75%, which is moderate compared to other states.

Q3: What is included in FICA?
A: FICA includes Social Security tax (6.2%) and Medicare tax (1.45%), totaling 7.65% for employees.

Q4: Are there other deductions not included here?
A: Yes, this calculator focuses on core taxes. Other deductions might include health insurance, retirement contributions, etc.

Q5: How often should I calculate my net income?
A: It's good practice to check whenever your income or tax situation changes significantly.