Take-Home Pay Explained: Why is My Check So Small?
You signed an offer letter for $60,000. You did the math: $60,000 / 12 months = $5,000.
But when your first direct deposit hits, it's only $3,800. Panic sets in. Where did the other $1,200 go?
The "Waterfall" of Deductions
Your money passes through several filters before it reaches you. Here is the order:
1. Gross Pay
Your total salary. (The number you brag about).
2. Pre-Tax Deductions
Money taken out before taxes are calculated.
- 401(k) Contributions
- Health Insurance Premiums
- HSA / FSA Contributions
3. Taxes (The Big Hit)
Mandatory government cuts.
- Federal Income Tax: 10% - 37% (Progressive)
- State Income Tax: 0% - 13% (Depends on location)
- FICA: 7.65% (Social Security & Medicare)
4. Post-Tax Deductions
Garnishments, Roth 401(k), or Union Dues.
5. Net Pay (Take-Home)
The money you actually get.
Real World Example
Let's look at a single person in Texas (No state tax!) making $60,000.
| Gross Monthly Pay | $5,000 |
| Federal Tax (Est) | -$450 |
| FICA (7.65%) | -$382 |
| Health Insurance (Avg) | -$150 |
| 401k (5%) | -$250 |
| Net Pay Check | $3,768 |
Check Your Own Paycheck
Don't guess. Use our calculator to see your exact deductions:
How to Increase Take-Home Pay
- Adjust W-4: If you get a huge refund every year, you are overpaying taxes monthly. Adjust your W-4 to keep more money now.
- Pre-Tax Benefits: Using an HSA or FSA lowers your taxable income, saving you money on taxes overall.
- Move States: Moving from California to Nevada (0% income tax) is effectively a 5-10% raise.