What is the difference between gross and net income?

Gross income is your total earnings before any taxes or deductions. Net income (take-home pay) is what remains after federal income tax, FICA (Social Security and Medicare), state and local taxes, and any pre-tax deductions like 401k contributions and health insurance premiums. For a typical W-2 employee, net income is roughly 70% to 80% of gross income, though the exact percentage depends on your tax bracket, state, and retirement contributions.

What is FICA and how is it calculated?

FICA is the payroll tax that funds Social Security and Medicare. Employees pay 7.65% of gross wages: 6.2% for Social Security (capped at a wage base, $168,600 in 2024) plus 1.45% for Medicare (no cap). Employers pay a matching 7.65%. Self-employed individuals pay both halves, totaling 15.3%, though half is deductible. The comparison uses the employee rate of 7.65% applied to your gross income.

How does a 401k contribution affect my net income?

Traditional 401k contributions are pre-tax, meaning they reduce your taxable income for federal (and most state) income taxes, but FICA still applies. For example, contributing 10% of a $100,000 salary ($10,000) reduces federal taxable income to $90,000 (after the standard deduction), lowering your federal tax bill. Your net pay drops by less than the contribution amount because of the tax savings. Roth 401k contributions are after-tax and do not reduce current taxable income.

What is the effective tax rate?

The effective tax rate is your total tax paid divided by your gross income. It is always lower than your marginal (top bracket) rate because income is taxed progressively across brackets. For example, a single filer earning $100,000 might have a marginal rate of 22% but an effective federal rate around 13% after the standard deduction. The comparison reports the combined effective rate across federal, FICA, and state taxes.

Why does filing status matter?

Filing status determines your standard deduction and tax bracket widths. Married Filing Jointly has roughly double the brackets and standard deduction of Single, which lowers taxes for couples with similar incomes. Head of Household sits between the two. The comparison lets you switch between Single, Married Filing Jointly, and Head of Household to see how the same gross income produces different net pay under each status.

Does the comparison include local taxes or deductions?

The comparison includes federal income tax, FICA, state tax (at a rate you provide), and 401k contributions. It does not include local city or county taxes, health insurance premiums, HSA contributions, or wage garnishments, all of which further reduce net pay. For a precise paycheck breakdown, use a pay stub or your employer's payroll estimator. This tool is designed to show the main levers and their relative size.

Gross vs Net Income Calculator

A gross vs net income comparison tool is a free online tool that shows the difference between total earnings and take-home pay. It breaks down taxes and deductions to show exactly where your money goes. Free, no sign-up required.

Income Inputs

Gross Annual Income?Enter your gross annual income.

Filing Status?Enter your filing status.

Filing status: 1 = Single, 2 = Married Filing Jointly, 3 = Head of Household.

401k Contribution?Your annual 401(k) contribution.

State Tax Rate?Your state income tax rate.

End of inputs

Gross vs Net Income

Metric	Gross Income Total earnings before taxes and deductions	Net Income (Take-Home) After federal, FICA, state tax, and 401k
Annual Gross	$100,000.00	$12,081.00
Monthly Gross	$8,333.33	$7,650.00

Of $100,000.00 gross, you keep $67,269.00 after $24,731.00 in taxes and $8,000.00 in 401k contributions — an effective tax rate of 24.73%.

Key Insights

Federal tax is $12,081.00 (Single brackets on $77,400.00 of taxable income after the $14,600.00 standard deduction and 401k).

FICA is $7,650.00 (7.65% of gross) and state tax is $5,000.00 at 5.00%.

Your 8.00% 401k contribution ($8,000.00) lowers federal taxable income, saving about $1,760.00 in federal tax at the 22% marginal rate.

Your marginal federal rate is higher than your 24.73% effective rate because income is taxed progressively across brackets.

Guide

How to Use This Calculator

1Enter your gross annual income (before any taxes or deductions).
2Choose your filing status using the slider (1 = Single, 2 = Married Filing Jointly, 3 = Head of Household).
3Set your 401k contribution percentage (pre-tax, reduces federal taxable income).
4Set your state income tax rate (use 0% for states with no income tax like Texas or Florida).
5Review the side-by-side comparison: annual gross and monthly gross on one side; federal tax, FICA, state tax, 401k, monthly net, and effective tax rate on the other.
6Read the AI Insight panel for a personalized breakdown of where your money goes and how each deduction affects take-home pay.

Formula

How It's Calculated

GROSS INCOME:
  annualGross = grossAnnualIncome
  monthlyGross = annualGross / 12

NET INCOME:
  contribution401k = annualGross × 401kRate
  fica = annualGross × 0.0765   (6.2% Social Security + 1.45% Medicare)
  stateTax = annualGross × stateTaxRate
  standardDeduction (2024):
    Single = $14,600, MFJ = $29,200, HoH = $21,900
  taxableIncome = max(0, annualGross − standardDeduction − contribution401k)
  federalTax = progressive bracket calculation on taxableIncome:
    Income is taxed across brackets; each bracket applies only to the
    income that falls within it. The result is the total federal tax.

  totalTax = federalTax + fica + stateTax
  netAnnual = annualGross − contribution401k − totalTax
  monthlyNet = netAnnual / 12
  effectiveTaxRate = totalTax / annualGross

The federal brackets are the 2024 IRS brackets for Single, Married
Filing Jointly, and Head of Household filers. FICA uses the employee
rate of 7.65% on gross wages (uncapped for Medicare, capped for
Social Security at the 2024 wage base of $168,600).

Glossary

Key Terms

FAQ

Frequently Asked Questions

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