Understanding your paycheck is essential for budgeting and financial planning. Payroll calculation involves taking your gross earnings and subtracting various statutory and voluntary deductions to arrive at your net pay, also known as "take-home pay."
Gross Pay vs. Net Pay
Gross Pay is the total amount an employee earns before any taxes or deductions are removed. For hourly workers, this includes regular hours plus any overtime hours (typically paid at 1.5 times the regular rate for hours worked over 40 in a week).
Net Pay is the amount that actually lands in your bank account. It is the result of Gross Pay minus Federal Income Tax, State Income Tax, FICA (Social Security and Medicare), and other deductions like health insurance premiums or 401(k) contributions.
Standard Payroll Deductions
Federal Income Tax: Based on your W-4 selections and tax bracket.
FICA: A combined 7.65% (6.2% for Social Security and 1.45% for Medicare) for most employees.
State/Local Taxes: Varies significantly depending on where you live and work.
Benefits: Voluntary deductions for insurance, retirement, or union dues.
Example Calculation
Suppose you work 45 hours at a rate of $20.00 per hour with a 15% combined tax rate:
Regular Pay: 40 hours × $20 = $800
Overtime Pay: 5 hours × ($20 × 1.5) = $150
Total Gross Pay: $800 + $150 = $950
Taxes (15%): $950 × 0.15 = $142.50
Net Take-Home: $950 – $142.50 = $807.50
function calculatePayroll() {
var rate = parseFloat(document.getElementById('hourlyRate').value);
var hours = parseFloat(document.getElementById('hoursWorked').value);
var fed = parseFloat(document.getElementById('fedTax').value) || 0;
var state = parseFloat(document.getElementById('stateTax').value) || 0;
var fica = parseFloat(document.getElementById('ficaTax').value) || 0;
var other = parseFloat(document.getElementById('otherDed').value) || 0;
if (isNaN(rate) || isNaN(hours)) {
alert("Please enter both Hourly Rate and Hours Worked.");
return;
}
var regularHours = hours > 40 ? 40 : hours;
var overtimeHours = hours > 40 ? hours – 40 : 0;
var regPay = regularHours * rate;
var otPay = overtimeHours * (rate * 1.5);
var grossPay = regPay + otPay;
var fedAmount = grossPay * (fed / 100);
var stateAmount = grossPay * (state / 100);
var ficaAmount = grossPay * (fica / 100);
var totalDeductions = fedAmount + stateAmount + ficaAmount + other;
var netPay = grossPay – totalDeductions;
document.getElementById('regPayRes').innerText = "$" + regPay.toFixed(2);
document.getElementById('otPayRes').innerText = "$" + otPay.toFixed(2);
document.getElementById('grossPayRes').innerText = "$" + grossPay.toFixed(2);
document.getElementById('deductionRes').innerText = "-$" + totalDeductions.toFixed(2);
document.getElementById('netPayRes').innerText = "$" + netPay.toFixed(2);
document.getElementById('payrollResult').style.display = 'block';
}