tax
Net Income (Take-Home Pay)
Net income is your earnings after all taxes and deductions have been removed. It is the amount that actually lands in your bank account — also called take-home pay.
For employees, net income = gross salary − income tax − social contributions (FICA/NI/CPP/EI/Medicare levy) − any other mandatory deductions. Voluntary contributions (pension, health insurance) further reduce the amount received.
Knowing your net income is essential for budgeting: your rent, mortgage, and spending decisions should be sized against net income, not gross. A $90,000 salary might net $65,000–$70,000 after US federal taxes and FICA.
Put this into practice with our free calculator:
Open calculator →Related terms
- Gross Income
- Gross income is your total income before any taxes, deductions, or withholdings. It is the starting figure used by lenders for DTI calculations and by tax authorities to determine your tax bracket.
- Effective Tax Rate
- Your effective tax rate is your total tax paid divided by your total income, expressed as a percentage. It is always lower than your marginal rate in a progressive tax system.
- Take-Home Pay
- Take-home pay is the net amount deposited after all payroll taxes and deductions. It is the practical number to use for monthly budgeting and affordability calculations.
Frequently asked questions
What is Net Income (Take-Home Pay)?
Net income is your earnings after all taxes and deductions have been removed. It is the amount that actually lands in your bank account — also called take-home pay.