Gross vs Net Income Explained
Gross income is your total earnings before any deductions. Net income (take-home pay) is what you actually receive after taxes and deductions are withheld from your paycheck.
Common Paycheck Deductions
Mandatory Deductions
- Federal Income Tax: Based on your taxable income and filing status
- State Income Tax: Varies by state (0% to 13.3%)
- Social Security (FICA): 6.2% up to the wage base limit
- Medicare: 1.45% (plus 0.9% additional for high earners)
- Local Taxes: Some cities/counties have additional taxes
Pre-Tax Deductions
- 401(k)/403(b): Retirement contributions reduce taxable income
- Health Insurance: Often paid with pre-tax dollars
- HSA/FSA: Health savings and flexible spending accounts
- Commuter Benefits: Transit and parking pre-tax deductions
2024 Federal Tax Brackets (Single)
- 10%: $0 - $11,600
- 12%: $11,601 - $47,150
- 22%: $47,151 - $100,525
- 24%: $100,526 - $191,950
- 32%: $191,951 - $243,725
- 35%: $243,726 - $609,350
- 37%: Over $609,350
States With No Income Tax
Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming
Ways to Increase Take-Home Pay
- Maximize pre-tax retirement contributions
- Use HSA/FSA accounts for medical expenses
- Ensure correct W-4 withholding allowances
- Take advantage of commuter benefits
- Consider moving to a lower-tax state