Net Income
What reaches your account after tax, benefits and retirement contributions come out.
Gross is the figure in the offer letter. Net is what clears after federal and state income tax, FICA for Social Security and Medicare, insurance premiums, and any pre-tax retirement contributions.
For most W-2 employees net lands between 60 and 75% of gross. State income tax explains much of the spread, since nine states levy none at all, and the rest is driven by how much is being routed pre-tax.
One distinction is worth holding onto: a 401(k) contribution lowers net income without lowering net worth, because that money moved into an account you own rather than leaving your balance sheet. Promi separates the two, so contributions never read as spending.
Worked through
Alex, 32
Software engineer in California on a $120k salary, and what reaches the bank account.
- Gross Salary
- $120k
- Federal Tax
- -$18k
- State + FICA
- -$16k
- Take-Home
- $86k
Take-home is 72% of gross here, and take-home is what rent and savings are actually drawn from.
Related in Accounts & Net Worth
See your own net income
Promi computes this from your linked accounts, with the definition one click from the number.
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