Negotiating a salary? Congratulations! But before you accept that offer letter, you need to know what that number really means for your bank account.
The Difference
- Gross Salary: The big number on your contract. This is your pay before any deductions.
- Net Salary: The amount that actually hits your bank account.
Where Does the Money Go?
If you are earning $100,000/year, you might only see $70,000. Here are the common deductions:
- Federal Income Tax: Progressive tax brackets take a chunk based on your earnings.
- Social Security & Medicare (FICA): A flat rate of 7.65% for most employees.
- State & Local Taxes: Depends on where you live (0% in Texas/Florida, up to 13% in California).
- Health Insurance: Premiums are often deducted pre-tax.
- Retirement (401k/EPF): Voluntary (mostly), but essential for the future.
Hourly vs. Salaried
- Salaried: Fixed pay regardless of hours worked. Often includes benefits.
- Hourly: Get paid for every hour, including 1.5x for overtime.
Convert It Instantly
Want to know your hourly rate from a yearly salary? Or monthly take-home from an hourly wage?
Convert Annual <-> Monthly <-> Hourly instantly and see the real value of your time.