Conducting salary research is essential when exploring careers. Use the information in this free lesson to start exploring salaries.
Now you know how to calculate your gross income per pay period. However, your net income, the amount of money you actually get in your paycheck, will be less than your gross income, since income tax and any contribution you make to your insurance or retirement will be taken out. Here we'll show you how to calculate your annual net income and your net income per pay period.
How much money you pay in income tax depends on a number of factors, including what company you work for and what state you live in. Therefore, how much tax is withheld will vary from person to person.
When calculating net income, you'll start with your annual gross income, since the government uses annual salaries to determine how much income tax you should pay. Let's say that you earn $12,000 a year. We'll assume that a total of $900 of that will be withheld for taxes during the year. To find out how much your net income will be per year, we'll subtract the amount of income tax you'll pay from your gross annual income.
$12,000 - $900 = $11,100 net annual income
To find out how much your net income is per pay period if you're paid biweekly, we'll divide your annual net income of $11,100 by 26.
$11,100 ÷ 26 = $426.92 net biweekly income
To find out how much your net income is per pay period if you're paid semi-monthly, we'll just divide your annual net income by 24.
$11,100 ÷ 24 = $462.50 net semi-monthly income
Note that when taxes are withheld from your paycheck, deductions, or factors that allow you to pay less in taxes, are not taken into account. If your deductions are more than the amount that was withheld from your pay, you will get a tax refund when you file your taxes.