How the salary calculator works
This annual salary calculator computes your total gross compensation (base + bonus + overtime), then applies all payroll deductions to show your net salary:
- Total gross: Base salary + annual bonus/commission + overtime pay
- Federal income tax: 2026 brackets after standard deduction
- State income tax: Based on your selected state (9 states have no tax)
- Social Security: 6.2% on first $184,500
- Medicare: 1.45% on all wages (+0.9% above $200K)
Tip: Use the state dropdown to compare your salary after tax across different states. For example, use this salary calculator for Texas to see how no state income tax boosts your take-home by 5–10% compared to high-tax states.
Gross vs. net salary
Gross salary
Gross annual pay (also called gross pay) is your total earnings before any taxes or deductions are taken out. Includes base pay, bonuses, commissions, and overtime. This is the number in your offer letter.
Net salary
What you actually receive after federal tax, state tax, Social Security, Medicare, and pre-tax deductions. Typically 65–80% of gross depending on your bracket and state.
Salary by pay period
How common annual salaries break down by period (gross, before taxes):
| Annual | Hourly | Weekly | Bi-weekly |
|---|---|---|---|
| $50,000 | $24.04 | $962 | $1,923 |
| $75,000 | $36.06 | $1,442 | $2,885 |
| $100,000 | $48.08 | $1,923 | $3,846 |
| $125,000 | $60.10 | $2,404 | $4,808 |
| $150,000 | $72.12 | $2,885 | $5,769 |
Overtime calculation
Under the FLSA, non-exempt employees earn 1.5× their regular hourly rate for hours over 40/week. This overtime calculator computes it as:
OT Pay = OT hours/week × 52 × (Salary ÷ 2,080) × Multiplier
As of 2026, the minimum salary for FLSA exempt status is $58,656/year. Employees earning below this threshold are entitled to overtime regardless of job duties.
How bonuses are taxed
Bonuses are classified as "supplemental wages" by the IRS. Employers can withhold at a flat 22% rate (or 37% for amounts over $1M). At tax time, your bonus is combined with regular income and taxed at your actual marginal rate.
Tip: If your bonus pushes you into a higher bracket, consider increasing your 401(k) contribution that pay period to offset the tax impact and build retirement savings simultaneously.
Salary increase calculator
Wondering how a pay raise affects your take-home? Run the calculator twice — once with your current salary, once with the new amount. The difference in net pay is your actual raise after taxes. A $5,000 raise in the 22% bracket yields about $3,500–$3,900 more take-home depending on your state.
To calculate salary increase percentage: ((New − Old) ÷ Old) × 100. Use our percentage calculator for quick math.
Payroll deductions explained
Your paycheck is reduced by mandatory federal taxes, state taxes (in most states), and any voluntary deductions you elected. Here's what comes out of every paycheck for a typical W-2 employee in 2026:
| Deduction | Rate / Amount |
|---|---|
| Federal income tax | 10%–37% (progressive) |
| Social Security (OASDI) | 6.2% on first $184,500 |
| Medicare (HI) | 1.45% (no cap) |
| Additional Medicare | +0.9% above $200K wages |
| State income tax | 0%–13.3% |
| Local / city tax | 0%–4% |
| SDI / paid family leave | Varies (~0.5%–1.2%) |
| 401(k) contribution | 0%–15% typical |
| Health insurance | $50–$600/paycheck |
| HSA / FSA | Up to $4,300 / $3,300 |
In total, between mandatory federal/state withholding and FICA, the average W-2 employee sees 22%–35% of gross pay withheld before voluntary deductions. Adding 401(k), health insurance, and HSA/FSA can push withholding to 40%–50% of gross — but those amounts return value (retirement, healthcare) rather than disappearing as taxes.
Take-home pay by state
State income tax dramatically affects your net salary. The same $100,000 gross salary nets very different amounts depending on which state you live in:
| State | Top Marginal Rate |
|---|---|
| California | 13.3% |
| Hawaii | 11.0% |
| New York | 10.9% |
| New Jersey | 10.75% |
| Massachusetts | 9.0% |
| Pennsylvania | 3.07% |
| Florida, Texas, TN, NV, WA, WY, SD, AK, NH | 0% |
For a $100,000 single filer, moving from California to Texas can boost annual take-home by approximately $6,000–$8,500. But evaluate total tax burden: no-income-tax states often have higher property tax, sales tax, or fees. Texas property tax averages 1.6%–2.0% (vs CA's 0.7%), and Tennessee has high sales tax. Run a complete cost-of-living comparison before relocating purely for tax reasons.
Salaried vs. hourly employees
The biggest practical difference between salaried and hourly pay isn't the rate — it's overtime eligibility, predictability, and benefits.
Salaried (typically exempt)
- Fixed weekly/biweekly pay regardless of hours worked
- No legal overtime requirement (if exempt)
- Usually includes paid time off, sick leave, benefits
- Better for budgeting — predictable monthly income
- Risk: working 50+ hours/week with no extra pay
Hourly (typically non-exempt)
- Pay tied to hours actually worked
- FLSA-required 1.5× overtime over 40 hrs/week
- Often unpredictable income (variable hours)
- Time tracking required (timesheets, clock-in)
- Often fewer benefits (especially part-time)
Converting between the two: Hourly = Annual ÷ 2,080. A $52,000 salary equates to $25/hr. A $25/hr non-exempt position working 45 hours/week earns $25 × 40 + $37.50 × 5 = $1,187.50/week × 52 = $61,750 annually — significantly more than the salaried equivalent due to overtime.
FLSA exempt vs. non-exempt
The Fair Labor Standards Act (FLSA) categorizes employees as exempt (no overtime required) or non-exempt (entitled to overtime). To be exempt, an employee must satisfy ALL three tests:
- Salary basis test: Paid a predetermined fixed salary, not subject to reduction based on quality or quantity of work.
- Salary level test: Earn at least the federal minimum salary threshold for exempt status. The 2026 federal minimum is approximately $58,656/year ($1,128/week). Some states require higher (CA: $66,560/year for 2025+; NY varies $1,124–$1,200/week).
- Duties test: Primary job duties must be executive (managing 2+ employees), administrative (office work using independent judgment), professional (advanced knowledge / creative), computer professional (specific tech roles), or outside sales.
Common misclassification: paying someone a salary doesn't make them exempt. If their duties don't qualify, they're entitled to overtime — and employers face back-pay and penalty risk. Notable exempt categories include doctors, lawyers, teachers, and outside sales reps (no salary minimum applies to these).
Highly compensated employees (HCE): Workers earning $151,164+ annually with at least one exempt-style duty are automatically exempt under simplified rules.
Pre-tax vs. post-tax deductions
Pre-tax deductions reduce your taxable income for federal and (usually) state purposes — saving you taxes equal to your marginal rate × deduction amount. Post-tax deductions don't reduce taxable income but may provide other benefits.
Pre-tax (reduces taxable income)
- Traditional 401(k) / 403(b) / 457(b)
- Health insurance premiums (Section 125)
- HSA contributions through payroll
- FSA (medical, dependent care, transit)
- Group term life (first $50K coverage)
- Commuter benefits ($315/mo in 2026)
Post-tax (no tax savings)
- Roth 401(k) contributions
- Voluntary life insurance over $50K
- Disability insurance (if you want benefits tax-free)
- Garnishments (child support, court orders)
- Union dues (in some states)
- Charitable payroll deduction
Tax savings example: A $1,000/month pre-tax 401(k) contribution for someone in the 22% federal + 5% state bracket reduces taxes by $270/month — meaning the $1,000 savings actually only reduces take-home by $730. The 401(k) "costs" you $730 but adds $1,000 to retirement.
Anatomy of a paycheck
Every paycheck stub (or earnings statement) typically shows these line items. Understanding each one helps you spot errors and budget correctly:
- Gross pay: Total earned this period (regular + overtime + bonus + commissions).
- YTD gross: Year-to-date gross — should match the running total of all paychecks.
- Federal withholding (FITW): Income tax withheld based on W-4 elections.
- FICA (SS + Medicare): Mandatory employee payroll taxes — usually shown as separate lines.
- State / local withholding: Income tax withheld for state (and city, if applicable).
- Pre-tax deductions: 401(k), HSA, FSA, health insurance — listed by deduction code.
- Post-tax deductions: Roth 401(k), voluntary life, garnishments, etc.
- Net pay: What gets deposited (or check amount). Gross minus all deductions.
- Employer contributions: Often shown but doesn't affect net (employer 401(k) match, share of health premium, employer FICA share). Informational only.
- Hours and rate: For hourly workers, regular and overtime hours plus rate.
- Leave balances: PTO, sick, vacation accrual and used hours (often shown).
Reconciliation tip: Multiply your gross pay × pay periods/year. The result should match (or be close to) your annual salary. If it's lower, check whether bonus/commission was included separately. If higher, an extra paycheck this year (27 vs. 26) might explain it.
Salary negotiation tips
Salary at job change is the single largest financial negotiation most people ever have. A 10% bump compounds over decades — and base pay anchors future raises, bonuses, and 401(k) contributions. Tips:
- Research market rates. Use Glassdoor, Levels.fyi, Salary.com, Payscale, BLS data. Adjust for location and years of experience.
- Wait for the offer. Don't reveal salary expectations before they make an offer. If pressed, give a range based on market data, weighted high.
- Always counter. 80% of recruiters expect a counter; making one rarely costs you the offer. Aim for 10-20% above the initial number.
- Negotiate the whole package. Sign-on bonus, equity (RSUs/options), PTO, remote work, title, start date, learning budget — all are negotiable.
- Use leverage. Competing offers are powerful. If you don't have one, expressed enthusiasm + research-backed counter still works.
- Get it in writing. Signed offer letter with exact base, bonus structure, equity vesting, and start date — verbal promises don't count.
- Don't reveal current salary. Many states (CA, NY, WA, MA, CO) prohibit employer asking. If asked: "I'm focused on the value I'd bring to this role; my expected compensation is X."
- Internal raises. Document quantified achievements, benchmark against market, ask in writing 60 days before review cycle starts.
Total compensation beyond salary
Base salary is just one component of total compensation. Comparing two job offers? Convert all the pieces to a single annual dollar figure:
- Base salary — fixed annual wages.
- Performance bonus — typical target 10-25% of base; weight by likelihood (use historical payout %).
- Sign-on bonus — divide by tenure (or just count year 1).
- Equity (RSU) — annual vested value at grant price. Public stocks: face value. Private startups: highly speculative, weight conservatively.
- Stock options — value depends on strike price vs. fair value; treat conservatively for private companies.
- 401(k) match — typically 3-6% of salary. Free money, fully part of comp.
- Pension — increasingly rare but valuable; calculate as % of salary contributed.
- Health insurance — employer share of premium worth $5,000–$25,000/year (family coverage).
- PTO — vacation days × daily wage. 3 weeks PTO at $100K = $5,769 value.
- Paid parental leave — only valuable if you'll use it; could be worth months of salary.
- Tuition reimbursement — often $5,250/year tax-free; valuable if pursuing degree.
- Remote work / commute savings — eliminating a 1-hour commute saves ~250 hours and $3,000+ in transit costs annually.
Cost-of-living adjustments
A salary's purchasing power varies dramatically by location. Tools like the Council for Community and Economic Research (C2ER) Cost of Living Index let you compare cities with the US average set to 100.
Example: A $100,000 salary in San Francisco (COL index ~250) has the same purchasing power as ~$40,000 in Memphis (index ~85). Conversely, $80,000 in Memphis equals ~$235,000 SF-equivalent.
Major COL components and how they vary:
- Housing (40-50% of COL): The biggest variable. Median home prices range from ~$150K in Detroit/Memphis to $1.5M+ in SF/San Jose.
- State + local taxes (5-15% of net): 0% in TX/FL/WA vs. 10%+ in CA/NY/NJ at high incomes.
- Transportation (10-15%): Owning 1-2 cars in suburbs vs. transit-only in NYC. Gas prices vary 30-50%.
- Childcare (significant for parents): Daycare ranges from ~$800/month (rural South) to $2,500+/month (NYC, SF, Boston).
- Groceries, utilities (10-15%): Vary 20-30% by region. Hawaii and Alaska are notably high.
Annual COLA raises: Many employers (and SS) adjust pay for inflation. The 2026 Social Security COLA was 2.5%. If your raise is below CPI inflation (~2.4-3.0% in 2025-2026), you're effectively taking a real-wage pay cut.
Common salary mistakes
- Comparing only base salary. Total comp (with equity, 401(k) match, healthcare) often differs by 30-50% across offers with similar base.
- Ignoring tax differences when relocating. A $20,000 raise to move from TX to CA may net less after state income tax + higher cost of living.
- Misclassifying as exempt. Being labeled "salaried" doesn't waive overtime rights if duties don't qualify under FLSA.
- Not maxing 401(k) match. Leaving the employer match on the table is the most common missed compensation.
- Confusing W-4 allowances with actual taxes. W-4 changes withholding but not what you owe. Owe big in April? Adjust W-4.
- Not negotiating sign-on bonus. Even $5,000 sign-on is one-time but real money. Companies have budget for this.
- Accepting first offer. 80%+ of recruiters expect counter. Failing to negotiate often costs $5K-$15K per year, compounding for life.
- Forgetting equity vest dates. Job change loses unvested RSUs. Calculate value forfeited; negotiate equity refresh or sign-on to offset.
- Treating bonus as regular income. Variable bonuses depend on company performance — don't lifestyle-creep based on hitting target.
- Misunderstanding bracket creep. A raise into a higher bracket only taxes the new income at the higher rate, not all your income.
Glossary
- Base Salary
- Fixed annual pay, exclusive of bonuses, commission, equity, or benefits.
- Total Compensation
- Base + bonus + equity + benefits + employer 401(k) match. The full economic value of employment.
- Gross Pay
- Total earnings before any deductions or taxes.
- Net Pay (Take-Home)
- What you receive after all taxes and deductions.
- FICA
- Federal Insurance Contributions Act — the 7.65% combined Social Security + Medicare tax on employees.
- FUTA / SUTA
- Federal/State Unemployment Tax — paid by employer, not deducted from your paycheck.
- FLSA Exempt
- Salaried employees who meet specific tests and are not entitled to overtime pay.
- FLSA Non-Exempt
- Employees entitled to 1.5× overtime over 40 hrs/week (federal). Some states require daily OT.
- W-2 Employee
- Standard employee with payroll taxes withheld; receives Form W-2 in January.
- 1099 Contractor
- Independent contractor — no withholding; pays own SE tax. Receives Form 1099-NEC.
- RSU (Restricted Stock Unit)
- Company stock granted to employees, vesting over time. Taxed as ordinary income at vesting.
- Vesting
- The schedule by which equity grants or 401(k) match becomes the employee's property.
- Pay Frequency
- How often you're paid: weekly (52), bi-weekly (26), semi-monthly (24), or monthly (12).
- COLA
- Cost of Living Adjustment — annual pay increase tied to inflation.
- YTD
- Year-To-Date — running total of pay or deductions since January 1.
FAQs
What is gross salary?
Gross salary is your total compensation before any deductions — including base pay, bonuses, commissions, and overtime. It's the number on your job offer letter. Net salary (take-home pay) is what remains after federal income tax, state tax, Social Security, Medicare, and pre-tax contributions are deducted.
How do you calculate net salary?
Start with gross salary. Subtract pre-tax deductions (401k, HSA). Apply the federal standard deduction, then calculate federal income tax using 2026 brackets. Add state income tax, Social Security (6.2% up to $184,500), and Medicare (1.45%). Net salary = gross − all taxes and deductions. This salary calculator does all of this automatically.
How is overtime calculated?
Under the FLSA, non-exempt employees earn 1.5× their regular hourly rate for hours worked over 40 per week. Your regular rate = annual salary ÷ 2,080 hours. So if you earn $60,000/year ($28.85/hr), overtime pays $43.27/hr. 5 hours of OT per week = 5 × 52 × $43.27 = $11,250/year extra gross pay.
Are bonuses taxed differently than regular salary?
Bonuses are taxed as supplemental wages. Employers can withhold at a flat 22% federal rate (or 37% for amounts over $1 million) instead of using your regular tax brackets. However, at tax filing time, bonuses are combined with your other income and taxed at your actual marginal rate. The withholding is just an estimate — you may get a refund or owe more.
How does a pay raise affect my take-home pay?
A raise increases your take-home pay by less than the full raise amount because of progressive taxation. A $5,000 raise in the 22% federal bracket means roughly $3,900 more take-home after federal tax, but even less after state tax and FICA. Use this salary calculator to compare your current vs. proposed salary to see the exact difference.
What is a good salary in the US?
The median household income in the US is approximately $80,000 (2024). A 'good' salary depends heavily on location. $75,000 goes much further in Oklahoma City than in San Francisco. Generally, earning above your area's median while keeping housing costs under 30% of gross income is a solid benchmark.
Is salary or hourly pay better?
Salary offers income predictability, benefits (health insurance, 401k, PTO), and career advancement. Hourly pay offers overtime compensation, clearer work/life boundaries, and pay for every hour worked. Salaried workers who consistently work 50+ hours may earn less per hour than their hourly counterparts. Use the salary calculator alongside our salary-to-hourly converter to compare.
How do you negotiate a higher salary?
Research market rates (Glassdoor, Levels.fyi, BLS data), quantify your value with specific achievements and metrics, time the ask after a success or during review season, present a specific number (not a range), and be willing to negotiate on total compensation (signing bonus, equity, PTO, remote work) if base salary is firm.
What is the average US salary?
The average (mean) annual wage in the US is approximately $65,000 (BLS, 2024). However, the median is lower at around $56,000 because high earners skew the average upward. Salaries vary widely by occupation, education, experience, and geography — tech workers in San Francisco average well above $100K, while retail workers nationally average around $35K.
How does my state affect my salary?
Your state determines your state income tax rate, which directly reduces take-home pay. Nine states (Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming) have no state income tax. For example, a salary calculator Texas shows zero state tax, while California takes up to 13.3%. Moving from California to Texas on a $100K salary could save over $5,000 in annual state taxes. Use the state dropdown above to compare.
What is the minimum salary for exempt employees in 2026?
As of 2026, the FLSA minimum salary threshold for exempt (salaried, not eligible for overtime) employees is $58,656 per year ($1,128/week). Employees earning below this threshold must be classified as non-exempt and are entitled to overtime pay regardless of job duties. This threshold was increased by the DOL in 2024.
Is overtime taxed differently?
No — overtime is taxed at the same income tax rates as regular pay. It may feel like overtime is taxed more because the extra income can push part of your earnings into a higher marginal bracket, but the higher rate applies only to the amount in that bracket, not your entire income. Your employer may also withhold at a higher rate on supplemental wages, but this is trued up when you file your annual return.
How do you calculate salary increase percentage?
Salary increase % = ((New Salary − Old Salary) ÷ Old Salary) × 100. For example, going from $60,000 to $65,000: ((65,000 − 60,000) ÷ 60,000) × 100 = 8.3% raise. A typical annual raise is 3–5%, while a promotion-related increase is often 10–20%. Use our percentage calculator for quick computations.
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