Salary Calculator

What is the difference between gross and net salary?

Gross salary is everything you earn before anything is taken off: your base salary plus allowances, bonuses, commission and overtime. Net salary, or take-home pay, is what is left after income tax, pension or provident fund contributions, insurance and other deductions.

Job offers and contracts usually state gross pay, while your bank account receives net pay. The gap can be large, so compare offers on both figures.

How do you convert between annual, monthly and hourly pay?

Everything goes through the yearly figure, because a year is the one period every pay pattern shares. With the full-time default of 8 hours a day, 5 days a week and 52 weeks, a year has 2,080 paid hours.

Anything entered “a year”, such as a bonus, is spread over 12 months in the monthly figures, so they show an average month. The calculator also shows take-home pay in a month without those yearly items, which is what most payslips will show.

• Annual from monthly: monthly × 12. A salary of 4,000 a month is 48,000 a year.
• Hourly from monthly: monthly × 12 ÷ hours a year. 4,000 a month is 48,000 ÷ 2,080 = 23.08 an hour.
• Daily: yearly ÷ (days a week × weeks a year). 52,000 ÷ 260 days is 200 a day.

Why do weeks per year matter?

A yearly salary is usually paid for all 52 weeks, including paid holidays. Hourly work is often paid only for the weeks actually worked, so 48 weeks with four weeks of unpaid leave gives about 8% less than the 52-week figure. Set “Paid weeks per year” to the weeks you are really paid for to compare the two fairly.

Months aren’t all the same length, so a monthly figure is the yearly figure divided by 12, not four weekly payments: 52,000 a year is 4,333.33 a month, while four weeks would be only 4,000.

How do salary deductions work?

Each deduction is either a fixed amount, such as 2,500 a month for health insurance, or a percentage. A percentage can be of gross pay or of base pay only, which is how many pensions and provident funds are set: 5% of a 100,000 base salary is 5,000, even when allowances bring gross pay to 110,000.

Pension and provident fund contributions are often taken before income tax. Tick that option and a percentage income tax is worked out on taxable pay, gross pay minus those contributions: with a 5% pension, 12.5% tax on 110,000 becomes 12.5% of 104,500 = 13,062.50, and take-home pay is 91,437.50.

Income tax often uses bands, where each part of your income has its own rate. A single percentage can’t show that, so enter the monthly tax from your payslip or your tax authority’s calculator as a fixed amount.

How is a salary increase calculated?

A percentage raise multiplies your current salary by one plus the rate: a 5% raise on 4,000 a month gives 4,000 × 1.05 = 4,200, which is 200 more a month and 2,400 more a year. A fixed raise is simply added, and its percentage is the raise divided by the old salary: 250 more on 4,000 is 6.25%.

A raise is usually quoted on gross pay, so your take-home pay rises by less once tax and percentage deductions are taken from the extra amount. When you have entered deductions, the Salary increase section shows the new take-home pay as well.

How do you compare two job offers fairly?

Compare take-home pay, not the headline salary, and compare it per hour worked as well as per month. An offer of 100,000 a month for 40 hours a week pays about 576.92 an hour; 105,000 a month for 48 hours a week pays about 504.81 an hour, so the higher salary is worth less for your time.

Add each offer’s allowances as pay, and its tax and contributions as one total percentage, in Compare two job offers. Benefits that aren’t paid as money, such as extra leave or health cover, are worth listing separately before you decide.