Where Does My Money Go?
Your offer letter might say $80,000, but your bank account tells a different story. Understanding the difference between Gross and Net pay is critical for budgeting.
Key Deductions Explained
- FICA (US): A flat 7.65% for Social Security and Medicare. You pay this on almost every dollar.
- Federal Tax: Progressive. The more you earn, the higher % you pay on the top chunk of your income.
- State Tax: Varies. Texas/Florida have 0% state tax, while California has up to 13%+.
Frequently Asked Questions
Why is my paycheck lower than my salary?
Your 'Gross Pay' is your official salary. Your 'Net Pay' is what lands in your bank after FICA (7.65%), Federal Income Tax (10-37%), and State Taxes.
What defines 'Take Home Pay'?
It is Income minus Taxes minus Pre-Tax deductions (like 401k/Health Insurance). This tool focuses on the Tax impact on your base salary.
Disclaimer: This tool is for educational purposes only and does not constitute professional financial advice. Results are estimates based on the information provided. Please consult a qualified financial advisor before making important financial decisions.