Take-Home Pay
 |
Definition of 'Take-Home Pay'The money that an individual actually receives from working after employment taxes and the cost of benefits and retirement contributions are subtracted. Take-home pay is calculated by taking an individual's monthly gross income and subtracting federal income tax, Social Security and Medicare taxes, any state or local income taxes, monthly health and dental insurance premiums, 401(k) contribution and contributions to a flexible spending account. The money that remains is what an employee actually has available for expenses like paying the mortgage, buying groceries and paying for discretionary purchases. |
 |
Investopedia explains 'Take-Home Pay'Because of all these payroll deductions, an individual's take home pay (or net pay) often differs significantly from their gross pay. When considering a salary offer for a job, raise or promotion, individuals should look at what their take home-pay, not their gross pay, will be. Similarly, when an employer extends a job offer, pay raise or promotion, he must consider that his true cost of having that employee is not just the employee's nominal salary, but also the matching portion of Social Security and Medicare taxes; contributions to the employee's health insurance premiums, retirement plan and any other benefits; pay for vacation days, sick days and personal days; and the employee's share of operating expenses (such as office space, equipment, utilities and parking). |
Related Definitions
Articles Of Interest
-
Payroll Deductions Pay Off
Find out how you can bypass or defer taxes on thousands of dollars each year. -
Small Business Tax Obligations: Payroll Taxes
Don't leave it up to your accountant - owners are ultimately responsible for fulfilling tax obligations. -
How Much Social Security Will You Get?
You've been paying in for years - now it's time to find out what the system owes you. -
Pay Attention To The Proxy Statement
Don't overlook this overview of a company's well-being. -
Lessons On Corporate Dividend Payout And Retention Ratio
Why are dividend payout and retention ratios important to consider when investing in company stock? What companies have high ratios?What constitutes a high dividend payout and retention ratio? ... -
Conglomerates: Cash Cows Or Corporate Chaos?
Huge companies may not be as infallible as previously assumed. Find out why bigger isn't always better. -
Cashing In On Corporate Restructuring
Companies use M&As and spinoffs to boost profits - learn how you can do the same. -
Top 4 Financial Jobs You Can Do From Home
You don't have to go to an office to make a great salary in the financial sector. Here are the top four highest paying financial jobs you can do from home. -
Get An Academic Finance Career
Working nine months a year and earning a six-digit salary might seem like the high life, but these jobs are not easy to come by. -
The Causes And Costs Of Absenteeism
Playing hooky to play golf may feel harmless, but the accumulated effect of absenteeism hurts businesses' bottom line. This article looks at the causes of absenteeism, the costs of lost productivity ...
Free Annual Reports