How to Calculate Net Pay From Gross Pay
Start with gross pay, subtract federal tax, Social Security, Medicare, and state tax, then any deductions. Here's the exact order.
- ✓Step 1 — Gross pay. Hourly rate × hours, or salary for the period, plus overtime and bonuses.
- ✓Step 2 — Pre-tax deductions. 401(k), HSA, and many health premiums come out before taxes are figured.
- ✓Step 3 — Payroll taxes. Federal income tax, Social Security 6.2%, Medicare 1.45%, and state tax if applicable.
- ✓Step 4 — Post-tax deductions. Roth contributions, garnishments, and similar items come out last.
COMPANY NAME
(555) 555-5555
COMPANY ADDRESS
CITY, STATE ZIP
Earnings Statement
EMPLOYEE NAME
(555) 555-5555
EMPLOYEE ADDRESS
CITY, STATE ZIP
and InformationThis PeriodYear To Date
Net pay is your take-home amount — what's left after every tax and deduction comes out of your gross earnings. Calculating it is a matter of subtracting each item in the right order.
Start with gross pay for the period. Take out pre-tax deductions (like a 401(k) or health premium) first, because they lower the income that gets taxed. Then apply payroll taxes — federal income tax, Social Security (6.2%), and Medicare (1.45%) — plus state income tax where it applies. Finally subtract any post-tax deductions. What remains is your net pay.
Frequently asked questions
- What percentage of gross pay is net pay?
- It varies by income and state, but most workers take home roughly 70–85% of gross after federal, Social Security, Medicare, and state taxes.
- Are Social Security and Medicare a fixed rate?
- Yes — Social Security is 6.2% and Medicare is 1.45% of wages for employees (up to the Social Security wage cap).
- Does a paystub generator do this math for me?
- Yes. PaystubProof calculates federal, state, Social Security, and Medicare automatically from the figures you enter and shows the resulting net pay.
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