Calculate Net Salary Using Microsoft Excel

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A net salary formula calculates an employee's actual take-home pay in light of gross wages and relevant deductions. 

Collect Payroll Data

Create a new workbook in Microsoft Excel, using your own pay stub or payroll remittance advice form as a guide. Populate the sheet's columns as follows:

ColumnValue
APay Date
BHours Worked
CHourly Rate
DPositive Adjustments (e.g., reimbursements or stipends)
ENegative Adjustments (e.g., voluntary payroll deductions)
FPre-Tax Deductions (e.g., insurance premiums)
GPost-Tax Deductions (e.g., garnishments)
HState Income Tax Rate
ILocal Income Tax Rate
JFederal Income Tax Rate
KMedicare Tax Rate
LPre-Tax Retirement Contributions
MPost-Tax Retirement Contributions

Because every employer is different and every state has slightly different tax rules, you'll need to identify for yourself which of your deductions and contributions are assessed before or after your taxes. Your federal tax rates may vary based on your exemptions; you can calculate your tax rates by dividing your assessed taxes against your taxable gross income from your pay stub.

Calculate Net Salary

Use the following formulas to calculate your net salary and other interesting financial metrics:

  • Net Salary: =((((B*C)+D)-Sum(E+F+L)) - (((B*C)+D)-Sum(E+F+L))*H - (((B*C)+D)-Sum(E+F+L))*I - (((B*C)+D)-Sum(E+F+L))*J - (((B*C)+D)-Sum(E+F+L))*K) - G - M
  • Gross Salary: =(B*C)+D
  • Pre-Tax Salary=(((B*C)+D)-Sum(E+F+L))

Considerations

Using a formula to calculate net salary makes sense if you're trying to approximate your take-home pay. However, some situations may adversely affect your calculations:

  1. If you're paid every other week, some deductions may not apply to the third payroll in the same month. In a calendar year, there are 26 pay periods but 24 fortnights and some deductions (e.g., for health insurance) may be calculated to pull only 24 times per year.
  1. Watch your pay stub to identify which deductions are pre-tax or post-tax. 
  2. Some deductions are based on a percentage of gross payroll—for example, garnishments.