The fast definitions
Gross pay is the total amount you earn before any deductions. It's the number on your offer letter.
Net pay is what actually arrives in your bank account after taxes, insurance, retirement contributions, and other deductions are taken out.
Net pay is typically 65–80% of gross pay in the US, depending on state, filing status, and benefits chosen.
What gets deducted from gross pay
Mandatory federal deductions
- Federal income tax — based on W-4 elections, ranges from 10% to 37% of taxable income
- Social Security tax — 6.2% of gross up to the wage base ($168,600 in 2024, indexed each year)
- Medicare tax — 1.45% of gross, no cap. Additional 0.9% surcharge on income over $200,000 single / $250,000 married.
State and local taxes
- State income tax — 0% to 13.3% depending on state. Nine states have no income tax (AK, FL, NH, NV, SD, TN, TX, WA, WY).
- State disability insurance — required in CA, HI, NJ, NY, RI (around 0.5-1.2%)
- Local income tax — applies in some cities (NYC, Philadelphia, several Ohio cities)
Voluntary pre-tax deductions
- Health insurance premiums — typically $50-$500/month for the employee's share
- 401(k) contributions — up to $23,500/year in 2025 (under 50), $31,000 (50+)
- HSA contributions — up to $4,300 single / $8,550 family in 2025
- FSA contributions — up to $3,300/year in 2025
- Commuter benefits — up to $315/month pre-tax in 2025
Worked example: $80,000 gross salary in Texas
Texas has no state income tax. Assuming single filer, no other deductions:
- Gross salary: $80,000
- Federal income tax (12%/22% brackets): ~$9,860
- Social Security (6.2%): $4,960
- Medicare (1.45%): $1,160
- Total taxes: $15,980
- Net pay: $64,020 (~80% of gross)
- Monthly net: ~$5,335
Same example: $80,000 gross salary in California
- Gross salary: $80,000
- Federal income tax: ~$9,860
- Social Security: $4,960
- Medicare: $1,160
- California state tax (~5% effective): ~$4,000
- CA SDI (1.1%): $880
- Total deductions: $20,860
- Net pay: $59,140 (~74% of gross)
- Monthly net: ~$4,928
The same nominal salary delivers ~$400/month less in California than Texas, before considering cost of living.
Add benefits and the gap widens
Most employees in the US opt for at least one of: health insurance, retirement contributions, FSA/HSA. Real take-home with typical benefits:
| Deduction | Typical monthly | Annual |
|---|
| Health insurance (employee share) | $150-$400 | $1,800-$4,800 |
| 401(k) at 6% of gross ($80K) | $400 | $4,800 |
| Dental + vision | $30-$60 | $360-$720 |
A typical $80K employee with average benefits in California takes home around $55K-$58K, or $4,600-$4,830/month. That's the realistic "your bank account" number.
The quick estimate
For a fast back-of-napkin estimate of monthly take-home:
- Take annual gross salary
- Multiply by 0.72 (for state with income tax) or 0.78 (for no-income-tax state)
- Divide by 12
$80,000 × 0.72 ÷ 12 = $4,800/month. Close enough for budgeting.
Why your paycheck is sometimes weird
Two common surprises:
- First-of-year paychecks are smaller — Social Security and 401(k) caps reset, so you might suddenly see your full FICA deduction return after hitting the cap late last year.
- "Bonus check" feels heavily taxed — federal bonus withholding is a flat 22% (or 37% over $1M). It's not actually higher — it's just withheld at a different rate than regular pay. You'll get the over-withholding back at tax time.
Track your gross-to-net ratio
Look at your most recent paystub. Divide net pay by gross pay. If your ratio is below 60%, you're either in a high-tax state, paying for premium benefits, or contributing aggressively to retirement. If above 85%, you're probably under-withholding and will owe at tax time.
Last updated May 2026. If something here is wrong or out of date, email contactus@calculatehours.net — we update fast.