Wage and Net Pay Calculator
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Gross Earnings:
Tax Deductions:
Estimated Net Pay:
How to Calculate Your Pay: A Step-by-Step Guide
Understanding exactly how your paycheck is calculated is essential for budgeting and financial planning. While many employees look only at the final number deposited into their bank accounts, several variables determine that amount.
1. Determining Gross Pay
Gross pay is the total amount you earn before any taxes or deductions are removed. To calculate this for an hourly employee:
- Regular Pay: Multiply your hourly rate by your standard hours (e.g., $25 x 40 hours = $1,000).
- Overtime Pay: Overtime is typically calculated at 1.5 times the hourly rate (often called "time and a half"). If you work 5 hours of overtime at a $25 base rate, the calculation is 5 x ($25 x 1.5) = $187.50.
- Total Gross: Add regular and overtime pay together ($1,000 + $187.50 = $1,187.50).
2. Estimating Deductions
Your net pay (take-home pay) is what remains after taxes. Common deductions include:
- Federal & State Income Tax: Based on your income bracket and location.
- FICA: Social Security and Medicare taxes.
- Benefits: Health insurance premiums or 401(k) contributions.
Example Pay Calculation
Imagine you earn $30.00 per hour and work 45 hours in a single week. You live in an area with an effective tax rate of 22%.
| Regular Pay (40 hrs x $30) | $1,200.00 |
| Overtime (5 hrs x $30 x 1.5) | $225.00 |
| Gross Total | $1,425.00 |
| Tax Withholding (22%) | -$313.50 |
| Weekly Net Take-Home | $1,111.50 |