How do I Calculate Bi-Weekly Net Salary?

by Owen E. Richason IV

1. Review your pay stub for tax deductions. The primary tax deductions are Medicare and Social Security, often referred to as FICA--which is the Federal Insurance Contributions Act. FICA taxes are 12.4 percent of your gross pay minus any health or dental insurance deductions, and Medicare is 2.9 percent of your gross pay minus any health or dental insurance. You're employer pays half of these taxes, making your tax deductions, 6.2 percent for Social Security and 1.45 percent for Medicare.

2. Subtract all insurance deductions. Using your gross annual salary figure, divide it by 26--the number of bi-weekly pay periods in a year. Take the result of the biweekly salary division and subtract all insurance contributions from a single pay period. For instance, if your gross annual salary is $50,000, divide it by 26 weeks, which comes to $1,923.08. And if your health and dental insurance contributions are $150, you would have a figure of $1,773.08.

3. Deduct

FICA and Medicare taxes. Using the above example of $1,773.08, subtract 6.2 percent for FICA withholdings and 1.45 percent for Medicare withholdings, which comes to $135.64--your new total is, $1,637.44.

4. Subtract all retirement contributions. If you contribute to a 401k, or Individual Retirement Account, review your pay stub for the contribution percentage and deduct it.

5. Consult the IRS's tax rate table and deduct your tax rate. The IRS taxes individual earners at different tax rates (See Resources). Locate your gross salary range and deduct your taxable rate after subtracting your pre-tax items, which include retirement contributions.

6. Consult your state's income tax table. Many states levy an income tax on wage earners after federal taxes have been deducted. Texas doesn't have a state income tax. Review your state's tax table for your income bracket and deduct state income taxes from your pay after subtracting FICA taxes, Medicare taxes, federal income taxes, health and dental insurance, and retirement contributions. This will yield your net biweekly salary.

Category: Paycheck

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