Take Home Pay Explained: 5 Easy Steps, No Nasty Surprises
Your offer letter says 100,000. Your bank account will say something else. Take home pay is the amount that actually arrives after tax and payroll deductions, and for a typical US single worker in the 2024 tax year, 100,000 of gross pay becomes about 73,009.
This guide is for anyone reading a first payslip or comparing offers. We will build the number step by step, define each term in plain language, and work four US examples. You can check any salary with the Take Home Pay Calculator. All figures are 2024 US federal rules with a simple state estimate, and tax rules change every year.
What take home pay actually is
Three words describe the same thing: net pay, take home pay and net salary. Your gross salary is the contract figure. Between that and your account sit several deductions, some set by law and some by your own choices.
The three families of deductions
| Family | What it is | Example in this guide | Who sets it |
|---|---|---|---|
| Income tax | Tax on earnings, rising with income through brackets | Federal brackets from 10% to 37% | Government, changes yearly |
| Payroll taxes | Funds retirement and health programs | Social Security 6.2% and Medicare 1.45% | Government, set by law |
| Local or optional | State tax, pension, insurance, benefits | A simple flat 5.5% state estimate | State and your own choices |
Income tax usually causes the confusion, so let us break it down. It is not a single percentage applied to everything.
Pick a country, enter gross annual pay and see tax, payroll deductions and monthly net pay. The calculation runs in your browser.
Open the Take Home Pay CalculatorHow tax brackets shape your net pay, in plain language
Imagine your income as water filling a row of buckets. The first bucket holds the first slice of income and is taxed at the lowest rate. Once it is full, the next slice goes in the next bucket at a higher rate. Only the money that lands in a bucket is taxed at that bucket rate.
| Rate | Taxable income band | Width of the band |
|---|---|---|
| 10% | 0 to 11,600 | 11,600 |
| 12% | 11,600 to 47,150 | 35,550 |
| 22% | 47,150 to 100,525 | 53,375 |
| 24% | 100,525 to 191,950 | 91,425 |
| 32% | 191,950 to 243,725 | 51,775 |
| 35% | 243,725 to 609,350 | 365,625 |
| 37% | Above 609,350 | No limit |
Before the buckets apply, the standard deduction comes off. For 2024 it is 14,600 for a single filer and 29,200 for a married couple filing jointly. A 100,000 salary therefore has taxable income of 85,400.
Worked example: 100,000 gross, step by step
- Subtract the standard deduction100,000 − 14,600 = 85,400 of taxable income.
- Fill the buckets10% of 11,600 is 1,160. 12% of 35,550 is 4,266. 22% of the remaining 38,250 is 8,415. Federal income tax is 13,841.
- Add payroll taxesSocial Security 6.2% of 100,000 is 6,200. Medicare 1.45% is 1,450.
- Add a state estimateA flat 5.5% is 5,500. This is a placeholder, because real state tax varies from nothing to over 13 percent.
- Subtract everything13,841 + 6,200 + 1,450 + 5,500 = 26,991. Net pay is 100,000 − 26,991 = 73,009, or 6,084 a month.
Net pay at four salary levels
| Gross | Federal tax | Social Security | Medicare | State estimate | Net pay | Per month | Total taken |
|---|---|---|---|---|---|---|---|
| 35,000 | 2,216 | 2,170 | 508 | 1,925 | 28,182 | 2,348 | 19.5% |
| 60,000 | 5,216 | 3,720 | 870 | 3,300 | 46,894 | 3,908 | 21.8% |
| 100,000 | 13,841 | 6,200 | 1,450 | 5,500 | 73,009 | 6,084 | 27.0% |
| 150,000 | 25,538 | 9,300 | 2,175 | 8,250 | 104,736 | 8,728 | 30.2% |
The share lost rises with income because of the brackets. Social Security also stops at a wage cap of 168,600 in 2024, so very high earners pay a smaller share of that tax.
Marginal rate, effective rate and net pay
Two numbers describe your tax, and people mix them up. The effective rate is total tax divided by gross pay, 27.0 percent in our example. The marginal rate is the rate on your next unit of income.
Effective rate
- Total deductions divided by gross
- 27.0% at 100,000
- Describes your whole year
Marginal rate
- Rate on the next dollar earned
- 22% federal here, plus 7.65% payroll and 5.5% state
- Describes what a raise is worth
Add the marginal pieces for our 100,000 earner: 22 + 7.65 + 5.5 = 35.15 percent. A raise of 1,000 therefore adds about 649 to your net pay, not 1,000. On 60,000, a raise of 5,000 adds 3,418, which is 68.4 percent of it.
A short history of the modern payslip
Payroll taxes come from the Social Security Act of 1935, part of the 1930s New Deal, and the payroll contribution system is called FICA, short for the Federal Insurance Contributions Act. Your employer pays a matching share on top of yours, so the real payroll cost of an employee is higher than the salary on the offer letter.
Income tax is withheld from each paycheck so that most workers pay as they earn instead of in one large bill. That is why your payslip shows tax every period.
Glossary of payslip terms
- Gross pay
- Total earnings before any deduction. The number on your contract.
- Net pay
- What you receive after deductions. The amount that reaches your account.
- Standard deduction
- A fixed amount subtracted from income before brackets apply, 14,600 for a single filer in 2024.
- Taxable income
- Gross pay minus deductions. The amount that brackets are applied to.
- Bracket
- A band of income taxed at one rate.
- FICA
- Payroll taxes for Social Security and Medicare, 7.65 percent for the employee.
- Withholding
- Tax taken from each paycheck and sent to the government for you.
- Effective rate
- Total tax divided by gross income.
How to read your first payslip
A payslip is a bridge between the contract number and the bank deposit. Most of them follow the same order, so once you know the pattern you can audit any one in a few minutes.
| Line | Meaning | Check against |
|---|---|---|
| Gross earnings | Pay for the period before deductions | Salary divided by number of pay periods |
| Federal withholding | Income tax sent to the government | Brackets and the form you filed with your employer |
| Social Security | 6.2% of wages up to the yearly cap | Gross for the period times 0.062 |
| Medicare | 1.45% of all wages | Gross for the period times 0.0145 |
| State withholding | Tax for your state, if any | Your state rate |
| Pre tax benefits | Health premiums or retirement savings | Your benefits election |
| Net pay | The deposit in your account | Gross minus every line above |
Run a quick test. On a monthly gross of 8,333, Social Security should be near 517 and Medicare near 121. If your payslip is far off, ask your payroll team. Small gaps are normal because withholding depends on the form you filed and on benefits that are taken before tax.
Also compare the year to date totals at the bottom. They show how much you have paid so far, which helps you spot a mistake early rather than at filing time. When you change jobs or get a raise, rerun your estimate so your budget reflects the new numbers.
What an estimate leaves out
- Pension or retirement contributions, which lower taxable income but also your cash pay
- Health insurance premiums, student loan repayments and other voluntary deductions
- Credits, itemised deductions and local taxes
- The exact tax of your own state, which can be zero or above 13 percent
A calculator built on published brackets cannot see your payslip. Use it to compare offers and plan a budget, then check your first real payslip against it.
To turn a salary into an hourly figure first, use the Salary to Hourly Converter. To see what your pay is worth after rising prices, try the Inflation Calculator.
Only the income above the bracket threshold is taxed at the higher rate. Income below it keeps its original rates, so a raise never lowers your take home pay by itself.
Frequently asked questions about take home pay
What is the difference between gross and net salary?
Gross salary is your pay before deductions. Net salary is what remains after income tax, payroll taxes and other deductions, and it is the money you can spend.
How do I calculate take home pay?
Subtract the standard deduction, apply the tax brackets to the rest, add payroll taxes and any state tax, then subtract the total from gross pay. For 100,000 in 2024 US rules that gives 73,009.
Why is my paycheck smaller than my salary divided by 12 once take home pay is counted?
Because deductions come out first. A 100,000 salary is 8,333 a month gross but about 6,084 a month after tax and payroll deductions in our example.
What is FICA tax?
FICA covers Social Security at 6.2 percent and Medicare at 1.45 percent for the employee. Employers pay a matching amount.
How much of a raise do you keep?
It depends on your marginal rate. For our 100,000 earner, about 65 percent of an extra 1,000 reaches the bank.
Is take home pay the same as net pay?
Yes. Net pay, take home pay and net salary all mean the amount you receive after deductions.
Sources: IRS: tax inflation adjustments for tax year 2024 · Federal Insurance Contributions Act tax, Wikipedia