If you get a new job, knowing your salary is nice, but it's not necessarily reflective of how much money you're actually going to bring home. If you know your salary, exemptions, filing status, and other withholdings, you can figure out how much you'll bring home per month.
First, figure out your after-tax income
Income taxes are much easier to figure out on an annual basis, so let's start there. The amount of Federal income taxes withheld from your paycheck is based on three factors:
- Your salary (which determines your tax bracket)
- The number of exemptions you claimed on your W-4
- Your filing status (single, married filing jointly, etc.)
First, take your salary and subtract $4,000 for each exemption you claim, as well as your standard deduction amount, as indicated in the table below. Also remember to subtract any pre-tax contributions to retirement accounts you'll be making.
|
Filing Status |
Standard Deduction |
|---|---|
|
Single |
$6,300 |
|
Married filing jointly |
$12,600 |
|
Married filing separately |
$6,300 |
|
Head of household |
$9,250 |
|
Surviving spouse |
$12,600 |
This number is an estimate of your taxable income. From here, you can use the following tax table to figure out approximately how much Federal income tax will be withheld from your paycheck. (Note: I only included single and married filing jointly due to space constraints. You can find full tax tables here.)
|
If you are a single filer and your taxable income is... |
Your Federal income tax will be... |
If you are a married joint filer and your income is... |
Your Federal income tax will be |
|---|---|---|---|
|
$0 to $9,225 |
10% of your taxable income |
$0 to $18,450 |
10% of your taxable income |
|
$9,226 to $37,450 |
$922.50 + 15% of the income over $9,225 |
$18,541 to $74,900 |
$1,845 + 15% of the amount over $18,451 |
|
$37,451 to $90,750 |
$5,156.25 + 25% of the income over $37,450 |
$74,901 to $151,200 |
$10,312.50 + 25% of the amount over $74,900 |
|
$90,751 to $189,300 |
$18,481.25 + 28% of the income over $90,750 |
$151,201 to $230,450 |
$29,387.50 + 28% of the amount over $151,200 |
|
$189,301 to $411,500 |
$46,075.25 + 33% of the income over $189,300 |
$230,451 to $411,500 |
$51,577.50 + 33% of the amount over $230,450 |
|
$411,500 to $413,200 |
$119,401.25 + 35% of the income over $411,500 |
$411,501 to $464,850 |
$111,324 + 35% of the amount over $411,500 |
|
$413,201 or more |
$119,996.25 + 39.6% of the income over $413,201 |
$464,851 or more |
$129,996.50 + 39.6% of the amount over $464,850 |
Take the amount of your tax and divide by 12 to determine how much will be withheld per month. Also calculate your state taxes, and any local taxes you may be subject to. Each state has a different tax rate (or none at all), and here's a link from TaxFoundtation.org to help you find yours.
We're not done with taxes quite yet. Social Security taxes will take 6.2% of up to $118,500 of your salary, and Medicare taxes will take another 1.45%, and is applied to your entire salary, no matter how much it is.
Then, figure out your other payroll deductions
From here, you'll need to tally up the rest of your deductions, including (but not limited to):
- Your retirement contributions (usually a percentage of your monthly salary)
- Benefits (health/dental/vision insurance, life insurance, etc.)
- Union dues
- Any wage garnishments
Remember to figure all of these amounts on a monthly basis. Many health insurance premiums are quoted on a monthly basis, but it's worth double-checking all of these amounts, and converting them to monthly figures, if necessary. For example, if you're a teacher and pay union dues of $20 from each semi-monthly paycheck, be sure to use $40 when adding up your deductions.
Finally, subtract your taxes and deductions from your gross pay
The final step is to take your salary, divide it by 12, and then subtract all of your taxes and payroll deductions. The result of this calculation will be your monthly take-home pay.
If this calculation seems rather complicated, there are payroll calculators online, such as this one (link) that do the math for you. At least you now know where the number on your paycheck is coming from.
An example
To illustrate this, let's consider an example. Let's say that you just got a new job with a starting salary of $60,000. For this calculation, we'll assume you are single, and claim just one exemption. You have agreed to contribute 5% of your salary to your new employer's 401(k) on a pre-tax basis. So your taxable income is:
|
Salary |
$60,000 |
|---|---|
|
Pre-tax retirement savings (5% of salary) |
-$3,000 |
|
Personal exemption |
-$4,000 |
|
Standard deduction |
-$6,300 |
|
Taxable income |
$46,700 |
According to the tax table mentioned earlier, your Federal income tax is expected to be $7,468.75 for the year. For simplicity's sake, let's say that you live in a state with no state income tax, so your taxes can be calculated with:
|
Federal income tax |
$7,468.75 |
|---|---|
|
Social Security tax |
$3,720 |
|
Medicare tax |
$870 |
|
Total taxes |
$12,058.25 |
Dividing by 12 gives us a monthly tax estimate of $1,004.90.
You have the following payroll deductions each month:
|
Retirement savings |
$250 |
|---|---|
|
Health, dental, and vision insurance |
$140 |
|
Life insurance |
$15 |
|
Total payroll deductions |
$405 |
Finally, taking your taxes and other items into account gives us your monthly take-home pay:
|
Monthly salary |
$5,000 |
|---|---|
|
Taxes |
-$1,004.90 |
|
Payroll deductions |
-$405 |
|
Take home pay (monthly) |
$3,590.10 |
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