How to calculate gross pay to net

Written by charlotte johnson
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How to calculate gross pay to net
Pay check (check in macro image by Alexey Klementiev from Fotolia.com)

Gross pay and net pay are two financial terms that enable you to understand how much money you earn. Gross pay is the amount of money that your employer pays you, whereas net pay is the amount of money that you receive after deductions. Calculating gross and net pay is important when you are negotiating a salary or planning your personal budget.

Skill level:
Easy

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Instructions

  1. 1

    Write down your gross pay, which should be listed on your pay check.

  2. 2

    List all of your deductions. Those include items such as federal and state income taxes, health insurance premiums and retirement plan contributions.

  3. 3

    Sum your deductions.

  4. 4

    Subtract the sum of your deductions from your gross pay to find your net pay. For instance, if your gross monthly pay is £1,950, and you have £780 in deductions, subtract £780 from £1,950 to get a net pay of £1,170.

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