Payroll & Take-Home Pay Explained
How gross salary becomes net pay — federal and state withholding, FICA, deductions, and what employers pay on top.
7 min read · Last updated: July 13, 2026
Gross pay vs net pay
Gross pay is your total earnings before any deductions. Net pay (take-home pay) is what lands in your bank account after taxes, insurance, retirement contributions, and other withholdings. Employers quote salaries in gross terms; budgeting requires net. A $78,000 annual salary does not mean $6,500 per month take-home — federal income tax, FICA (Social Security and Medicare), state tax, and benefits can reduce net pay by 25–35% depending on location and elections.
Pay frequency matters
Biweekly pay (26 checks per year) differs from semi-monthly (24 checks). Dividing annual salary by 12 gives a monthly estimate, but actual biweekly checks are annual salary ÷ 26. Overtime, bonuses, and commission are often taxed at supplemental rates. Use the CalcVo Payroll Calculator to model your specific pay frequency and deduction percentages.
Common deductions
Federal income tax withholding depends on W-4 elections and IRS tables. FICA is 7.65% for most employees (6.2% Social Security up to the wage base, 1.45% Medicare). State and local taxes vary. Pre-tax deductions (401k, HSA, health insurance) reduce taxable income. Post-tax deductions (Roth 401k, garnishments) do not. The CalcVo Salary / Paycheck Calculator estimates take-home from gross with common deduction categories.
Hourly and overtime workers
Non-exempt employees earn 1.5× their regular rate for hours over 40 per week (US federal default). Some states require daily overtime. Convert salary to hourly with the CalcVo Hourly Rate Calculator, then model overtime with the Overtime Pay Calculator. Time Card Calculator helps sum regular and OT hours from clock times.
Calculate your take-home pay
Use the CalcVo Payroll Calculator for per-period net pay, the Salary / Paycheck Calculator for annual-to-period conversion, and the Hourly Rate Calculator to convert salary to an hourly equivalent. All tools run locally in your browser.