Calculate Net Salary Using Microsoft Excel

Know your pay before you get paid

A net salary formula calculates an employee's actual take-home pay in light of gross wages and relevant deductions. If you need to figure out what your take-home pay will be, this formula will do just the trick.

Employee using spreadsheet on laptop.
Ariel Skelley / DigitalVision / Getty Images

Instructions in this article apply to Excel 365, Online, 2019, 2016, 2013, 2010, and Excel for Mac.

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:

Column Value
A Pay Date
B Hours Worked
C Hourly Rate
D Positive Adjustments (e.g., reimbursements or stipends)
E Negative Adjustments (e.g., voluntary payroll deductions)
F Pre-Tax Deductions (e.g., insurance premiums)
G Post-Tax Deductions (e.g., garnishments)
H State Income Tax Rate
I Local Income Tax Rate
J Federal Income Tax Rate
K Medicare Tax Rate
L Pre-Tax Retirement Contributions
M Post-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

The easiest way to calculate net salary is to break it up in smaller formulas rather than a long, complicated formula. In this tutorial, we've entered in the information in the table from above and have entered some payroll data in row 2.

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

  • Net Salary: Hours worked x Hourly Rate + Positive Adjustments - (Negative Adjustments, Pre-tax Adjustments, and Pre-tax Retirement Contributions) - All taxes (Local, State, Federal, and Medicare) - Post-tax deductions
  • Gross Salary: Hours worked x Hourly Rate + Positive Adjustments
  • Pre-Tax Salary: Hours worked x Hourly Rate + Positive Adjustments - Negative Adjustments, Pre-tax Adjustments, and Pre-tax Retirement Contributions
  1. This example uses data from the above chart and enters payroll information into Row 2.

    Basic payroll information has been entered into Excel.
  2. Below Row 2, (Cell B4 here) enter Gross Salary and press Enter.

    Entering Gross Salary into a cell in Microsoft Excel.
  3. In Cell C4, enter the following formula and press Enter: =B2*C2+D2

    Entering Gross Salary formula into a cell in Microsoft Excel.
  4. In Cell B5, enter Pre-Tax Salary and press Enter.

    Entering Pre-Tax Salary into a cell in Microsoft Excel.
  5. In Cell C5, enter the following formula and press Enter: =B2*C2+D2-(E2+F2+L2)

    Entering pre-tax salary formula into a cell in Microsoft Excel.
  6. In Cell B6, enter State Income Taxes and press Enter.

    Entering State Income Taxes into a cell in Microsoft Excel.
  7. In Cell C6, enter the following formula and press Enter: =C5*H2

    Entering state income taxes formula into a cell in Microsoft Excel.
  8. In Cell B7, enter Local Income Taxes and press Enter.

    Entering Local Income Taxes into a cell in Microsoft Excel.
  9. In Cell C7, enter the following formula and press Enter: =C5*I2

    Entering local income taxes formula into a cell in Microsoft Excel.
  10. In Cell B8, enter Federal Income Taxes and press Enter.

    Entering Federal Income Taxes into a cell in Microsoft Excel.
  11. In Cell C8, enter the following formula and press Enter: =C5*J2

    Entering federal income taxes formula into a cell in Microsoft Excel.
  12. In Cell B9, enter Medicare\SS Taxes and press Enter.

    Entering Medicare\SS into a cell in Microsoft Excel.
  13. In Cell C9, enter the following formula and press Enter: =C5*K2

    Entering Medicare\SS formula into a cell in Microsoft Excel.
  14. In Cell B10, enter Net Salary and press Enter.

    Entering Net Salary into a cell in Microsoft Excel.
  15. In Cell C10, enter the following formula and press Enter: =C5-C6-C7-C8-C9-G2-M2

    Entering net salary formula into a cell in Microsoft Excel.

By breaking up the formula into smaller steps, you can easily see how your each of your taxes and deductions are compiled to generate your net salary. Then referencing each result in the final formula (in cell C10) you can quickly compute the final results.

You might want to format the cells in the currency format and round to 2 decimals for easier reading.

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:

  • 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 (for example, for health insurance) may be calculated to pull only 24 times per year.
  • Watch your pay stub to identify which deductions are pre-tax or post-tax. 
  • Some deductions are based on a percentage of gross payroll — for example, garnishments.