Figuring your next paycheck is pretty straightforward when you’re on a fixed salary, as you’re always paid the same amount unless you have a salary or deduction change. If you’re an hourly worker and don’t always work the same number of hours each week, things aren’t so predictable. If your wages and deductions won’t change by your next payroll, you’ll get the same amount of pay as the last time. If not, your take-home pay will be different.
Calculate your gross earnings for the pay period. If you’re salaried, divide your annual salary by the number of yearly pay periods such as 52 weekly payrolls, 26 biweekly payrolls or 24 semimonthly payrolls. If you're paid by the hour, multiply your regular hours by your regular pay rate and your overtime hours by the overtime rate of 1.5 times your regular rate. Under federal law, overtime hours are those that go over 40 for the workweek. Add regular and overtime wages to get gross earnings.
Subtract pretax deductions and nontaxable wages from gross earnings to get taxable gross earnings. Pretax varies by employer, so consult your payroll department, if necessary. Pretax deductions include qualified 401(k) contributions and cafeteria plans such as medical, dental, life and vision insurance. Nontaxable wages include reimbursements such as for meals, lodging and mileage.
Deduct federal income tax, Social Security tax and Medicare tax from your taxable wages. Calculate your federal income tax based on the filing status and allowances you put on lines 3 and 5 of your W-4 form. Get a copy of Internal Revenue Service Circular E online. Apply the Circular E tax table that matches the W-4 and your pay period and taxable wages. As of 2012, calculate Social Security tax at 4.2 percent of taxable wages up to $110,100 for the year, and Medicare tax at 1.45 percent of all taxable wages.
Subtract state and local taxes from taxable wages. Whether you’re liable for these taxes depends on your state and employment location. If necessary, check with your payroll department or state revenue agency for your requirements. State taxes include state income tax, state unemployment tax and state disability insurance. Local taxes include city and county tax. Also, state and local taxation requirements for pretax deductions vary, so consult with the revenue agency, if necessary.
Apply wage garnishment, if applicable. Wage garnishments are taken out of disposable earnings, which are wages after mandatory deductions such as payroll taxes. Check the garnishment paperwork for the deduction amount or contact the issuing agency.
Figure after-tax deductions, if applicable. These deductions don’t qualify as pretax and may include Roth 401(k), union dues and after-tax health and life insurance. The rest of your pay is what you’ll take home on your next payday.
- During your calculation, factor in foreseeable changes. For example, you received a pay raise effective on the next pay period. Compute your gross wages according to the new pay rate instead of the old one. Same idea if you have a deduction change. For example, you changed the filing status on your W-4 from single to married. To figure federal income tax, if you’ll be filing a joint return with your spouse, apply the Circular E tax-withholding table that applies to married instead of single.
Grace Ferguson has been writing professionally since 2009. With 10 years of experience in employee benefits and payroll administration, Ferguson has written extensively on topics relating to employment and finance. A research writer as well, she has been published in The Sage Encyclopedia and Mission Bell Media.