The Complete Guide to Salary & Income Calculations (2026)
Whether you are negotiating a new job offer, relocating to another country, or simply trying to understand your paycheck, knowing how salary calculations work is essential. This guide breaks down everything from gross-to-net conversions to international tax comparisons, with real data for 2026.
We cover the formulas behind every number, compare tax systems across five major economies, and link to interactive calculators so you can model your own scenario in seconds.
Key Takeaways
- Gross salary and net (take-home) pay can differ by 25-45% depending on your country and tax bracket.
- The US has a progressive federal tax system with 7 brackets ranging from 10% to 37% in 2026.
- State taxes in the US vary dramatically: 0% in Texas/Florida vs 13.3% top rate in California.
- European countries generally have higher taxes but include universal healthcare and generous benefits.
- Hourly-to-annual conversion: multiply hourly rate by 2,080 (40 hours x 52 weeks) for a standard estimate.
- Cost of living adjustments are critical — a $100K salary in San Francisco has less purchasing power than $70K in Austin.
Understanding Gross vs Net Pay
Gross pay is your total compensation before any deductions. It includes your base salary, bonuses, overtime, and any other taxable income. Net pay — often called take-home pay — is what lands in your bank account after federal tax, state tax, Social Security, Medicare, and any voluntary deductions like health insurance or retirement contributions.
The gap between gross and net can be substantial. A worker earning $100,000 gross in New York might take home around $68,000 after federal tax (~$15K), state tax (~$5K), NYC local tax (~$3K), and FICA (~$7.65K). In contrast, the same salary in Texas (no state income tax) would yield roughly $76,000 net.
Understanding this difference is crucial before accepting a job offer. Use our salary calculator to see your exact take-home pay based on your location and filing status.
Calculate your gross-to-net conversion instantly with our free tool.
Try Gross vs Net Calculator →Tax Brackets Explained
The United States uses a progressive tax system, meaning higher portions of your income are taxed at higher rates. In 2026, the federal brackets for single filers are: 10% (up to $11,925), 12% ($11,926-$48,475), 22% ($48,476-$103,350), 24% ($103,351-$197,300), 32% ($197,301-$250,525), 35% ($250,526-$626,350), and 37% (over $626,350).
A common misconception is that earning more always means paying a higher rate on all income. In reality, only the income within each bracket is taxed at that rate. If you earn $60,000, only $11,525 of that is taxed at 22% — the first $11,925 is taxed at 10% and $36,550 at 12%.
| Tax Bracket | Single Filer Range | Married Filing Jointly |
|---|---|---|
| 10% | $0 - $11,925 | $0 - $23,850 |
| 12% | $11,926 - $48,475 | $23,851 - $96,950 |
| 22% | $48,476 - $103,350 | $96,951 - $206,700 |
| 24% | $103,351 - $197,300 | $206,701 - $394,600 |
| 32% | $197,301 - $250,525 | $394,601 - $501,050 |
| 35% | $250,526 - $626,350 | $501,051 - $751,600 |
| 37% | Over $626,350 | Over $751,600 |
See how tax brackets affect your specific income level.
Calculate Your Tax →How Salary Calculators Work
A salary calculator takes your gross income, applies the relevant tax brackets (federal + state), deducts FICA contributions (Social Security at 6.2% up to $168,600 and Medicare at 1.45%), and subtracts any pre-tax deductions you specify. The result is your estimated net pay per year, month, biweekly period, or week.
Our calculator also accounts for standard vs itemized deductions, filing status (single, married, head of household), and state-specific rules. For international users, we apply the relevant country tax formulas — UK PAYE and National Insurance, German solidarity surcharge and church tax, Canadian federal/provincial rates, and Australian tax brackets with Medicare levy.
For a deeper dive into our exact formulas, see our salary calculation methodology page.
Country-by-Country Salary Comparison
Comparing salaries across countries requires looking beyond the raw numbers. A $60,000 salary in the US is not directly comparable to £45,000 in the UK or €55,000 in Germany because tax rates, benefits, and cost of living differ dramatically.
The table below shows what a $100,000 equivalent gross salary looks like after taxes and mandatory contributions in five major economies. Note that UK and German figures include universal healthcare through National Insurance and social contributions, while US workers must additionally budget for health insurance premiums.
| Country | Gross (Local) | Gross (USD) | Net (USD) | Effective Tax Rate |
|---|---|---|---|---|
| United States (NY) | $100,000 | $100,000 | $68,200 | 31.8% |
| United Kingdom | £79,000 | $100,000 | $66,800 | 33.2% |
| Germany | €92,000 | $100,000 | $58,400 | 41.6% |
| Canada | C$137,000 | $100,000 | $67,500 | 32.5% |
| Australia | A$155,000 | $100,000 | $69,100 | 30.9% |
Compare your salary across countries with our dedicated calculators.
See Full Country Comparisons →US State Tax Comparison
State income taxes can significantly impact your take-home pay. Nine states charge no income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. On the other end, California tops out at 13.3% and New York at 10.9% (plus NYC local tax of up to 3.876%).
For a worker earning $100,000, moving from California to Texas could increase annual take-home pay by roughly $6,000-$8,000. However, states with no income tax often have higher property taxes or sales taxes to compensate. Texas, for example, has some of the highest property tax rates in the nation at around 1.8% of home value.
| State | Top Income Tax Rate | $100K Net Pay | Notes |
|---|---|---|---|
| California | 13.3% | $66,500 | Highest state income tax |
| New York | 10.9% | $67,200 | + NYC tax up to 3.876% |
| Illinois | 4.95% | $72,800 | Flat rate |
| Washington | 0% | $76,300 | No income tax, high sales tax |
| Texas | 0% | $76,300 | No income tax, high property tax |
| Florida | 0% | $76,300 | No income tax |
Calculate your exact take-home pay in any US state.
Try State Salary Calculators →Hourly vs Salary Conversion
Converting between hourly and annual salary is straightforward: Annual Salary = Hourly Rate × Hours per Week × 52. For a standard 40-hour work week, the multiplier is 2,080 hours per year. So a $30/hour rate equals approximately $62,400 annually before taxes.
However, real-world comparisons must account for benefits. Salaried employees typically receive health insurance, paid time off, retirement matching, and other benefits worth 20-30% of base salary. A salaried position at $62,400 with benefits may be worth $75,000-$80,000 in total compensation, while a $30/hour contractor must cover all benefits independently.
Try our hourly to salary converter for instant calculations.
Cost of Living Adjustments
A salary that seems high on paper may not go far in an expensive city. The cost of living index measures relative expenses across locations, with the US national average set at 100. San Francisco scores around 190, meaning it costs 90% more than average. Meanwhile, cities like Memphis (82) and Oklahoma City (87) are well below average.
When comparing job offers in different cities, adjust the salary by the cost of living ratio. A $150,000 offer in San Francisco has roughly the same purchasing power as $79,000 in Memphis. Our salary by state dataset includes cost of living indexes for every state.
| City | COL Index | $100K Equivalent | Avg. 1BR Rent |
|---|---|---|---|
| San Francisco | 190 | $52,600 elsewhere | $3,200/mo |
| New York City | 187 | $53,500 elsewhere | $3,400/mo |
| Seattle | 156 | $64,100 elsewhere | $2,100/mo |
| Austin | 103 | $97,100 elsewhere | $1,500/mo |
| Memphis | 82 | $121,950 elsewhere | $950/mo |
Salary Negotiation Tips
Research is the foundation of effective salary negotiation. Before entering any discussion, know your market value by checking our salary data by country and industry benchmarks. Websites like Glassdoor and Levels.fyi provide company-specific data, while our calculator helps you understand the actual take-home impact of different offers.
Always negotiate total compensation, not just base salary. Stock options, signing bonuses, remote work flexibility, extra PTO, and education budgets can add 10-30% to the value of an offer. A $90K base with a $10K signing bonus, 4 weeks PTO, and full remote work may be more valuable than a $100K base with 2 weeks PTO and mandatory office attendance.
When countering, use specific numbers backed by data. Instead of saying "I want more," try: "Based on industry data for this role in this market, the median compensation is $X. Given my Y years of experience and Z skill set, I believe $X+10% is appropriate." Data-driven arguments are harder to dismiss.