To determine how much is made after taxes (take-home pay), first calculate the gross pay. Then subtract obligatory deductions including:
- FICA taxes (Social Security and Medicare, 7.65% for most earnings up to $168,600 in 2024),
- Federal income tax based on your tax bracket and filing status,
- State income tax based on your state's tax rates,
- Local income taxes if applicable,
- Any pre-tax deductions like health insurance.
The formula is:
Net pay = Gross pay - (FICA + federal tax + state tax + local tax + other
deductions). Example:
If gross is $525 weekly, subtract $40 health insurance, then 7.65% FICA on
remaining $485, then federal, state, and local taxes to get net take-home pay,
which may be around $373.78 for the example scenario.
