The $900 that vanishes from your paycheck every month.
On a $60,000 salary, how much actually lands in your account each month?
Salary ÷ 12 is not your paycheck. In between sits a structure of payroll taxes and income tax.
Experiment
Hands-on experiment
Predict first — a $60,000 salary. Divided by 12 that's $5,000, but how much actually lands in your account each month?
Peel the deductions off one by one ($60,000 salary)
Gross monthly
$5,000
What remains
$5,000
Read more — why it exists · insights · common mistakes · formulasExpand ▾
Why
Why does this exist?
A $60,000 salary. Divide by 12 and you get $5,000 — but the deposit reads closer to $4,100. Where do $900 a month go?
The deductions come in two kinds: payroll taxes (Social Security and Medicare — FICA), and federal income tax. Each is 'a percentage of something different'.
Without this structure, you can't predict how a raise changes your take-home, and you're left wondering 'my salary went up — why did my paycheck barely move?'. Know the structure, and your pay stub starts to read itself. (We use 2024 US federal rules, single filer, as the running example.)
Misconception
Common misconceptions
Your paycheck is your salary divided by 12.
That's your gross pay. After FICA (7.65%) and federal income tax, the take-home lands around 75–85% of gross depending on the salary level — before state taxes.
A $5,000 raise means about $417 more per month.
The raise gets taxed too. And since income tax is progressive, the raise can be taxed at a higher rate than the rest of your income. The real monthly increase is always less than $417.
Formula
Writing it as math
Each deduction from the experiment has its own base and rate. Get the big structure into formulas and the pay stub becomes readable. (Exact numbers change every year — focus on the structure.)
The structure of take-home pay
These are the whole story (plus state tax where applicable). Know 'what % of what' each one is, and every line on the stub is explained.
Payroll taxes (FICA) — flat structure
A simple flat percentage of wages (Social Security caps out at $168,600 of wages in 2024). The ratio barely changes as your salary grows.
Income tax — progressive structure
Income tax applies progressive brackets not to your whole salary, but to income after the standard deduction ($14,600 in 2024). This is why the take-home ratio falls as salaries rise — details in the Progressive Tax lab.
In Real Life
Where you meet it in real life
Salary negotiation
If you can compute the take-home effect of 'a $5,000 raise' in advance, you can compare it precisely against non-salary terms (bonus, benefits, equity).
Comparing job offers
Two offers with the same nominal salary but different bonus structures differ in take-home and stability. You need the structure to compare properly.
Tax-return season
The tax withheld each month is an estimate; the annual return recalculates it exactly with your deductions. That's what refunds and balances due really are.
Loan qualification
Debt-to-income rules for mortgages are based on income. Know your income's structure and you can predict your borrowing limit.
Math Behind
The math behind this
Related lab
Functions
Salary → take-home is one function — but a piecewise-defined one whose rule changes across ranges. That's why simple proportions get it wrong.
Go to the Functions lab →Connection
Labs connect
Previous lab
Loans
Curious about loans, which run on income as their yardstick? Head to the previous lab.
← Loans labRecommended next
Progressive Tax
The heart of the take-home calculation is the progressive income tax. Bust the biggest myth — 'crossing a bracket hurts you' — in the next lab.
Go to the Progressive Tax lab →