Are you immersed in a selection process and want to prepare for the salary negotiation? Have you just received a job offer and want to know what is net salary you would receive at the end of the month? Do you need to define your salary expectations as part of your job search process? Are you renegotiating your economic conditions with your company and want to know how an increase in your monthly salary will affect you?
The net or liquid salary is the amount of money the worker receives as consideration for his services after discounting Social Security contributions and taxes. The net salary is calculated by subtracting from the total accrued in the payroll (the income that corresponds to the worker) the amount that must be deducted for personal income tax and Social Security.
What is net salary in a payroll?
Concepts that are part of your payroll
- Base salary is the total remuneration for the work performed.
- Salary supplements remuneration added to the employee’s base salary based on their circumstances, the work done, the situation, and the company’s results.
- Extra-salary accruals payments that the company makes to the employee are not directly related to the work done but compensate the worker’s expenses derived from the development of their work.
- Benefits and compensation to Social Security are those amounts the employee receives when he is on temporary disability or partial unemployment.
- IRPF, which constitutes an advance of what corresponds to the employee to contribute in the Income Statement, in which the exact figure will be specified.
- Contributions to Social Security include common contingencies (non-work accident, common illness, and maternity), unemployment, professional training, and overtime.
Difference Net Salary vs Gross Salary
Knowing the difference between gross and net salaries is very important when evaluating and comparing job offers, paying taxes, or processing aid and subsidies. However, it remains a question that generates many doubts.
Gross salary is the amount that the company pays the worker. The net salary is the amount that the worker receives each month, discounting the different contributions to Social Security and the withholding of Personal Income Tax (IRPF). Therefore, the gross salary is always higher than the net.
It made contributions to Social Security by salaried workers under various concepts: common contingencies (4.70%), unemployment (1.55%), and professional training (0.10%). In the case of temporary contracts, the contributions for unemployment are 1.60%.
Personal income tax withholding on the gross salary of workers is progressive (between 19% and 45%, with different sections). The higher the salary, the higher the tax. However, some different reductions and bonuses establish minimum amounts that are not taxed according to the personal and family situation, so the actual withholding is lower.
Gross salary is used as a reference when calculating compensation and benefits and is also one of the main criteria for accessing public aid.
When evaluating a job offer or negotiating a salary increase, it is recommended to always refer to the gross salary.
What is net salary, and how to calculate it?
Calculate your net salary: how much is taken from your gross salary?
To calculate the net salary, the following deductions must be eliminated: Social Security contributions and taxation to the Treasury (IRPF).
Other variables to calculate the net salary
Net salary also depends on the following factors:
- Gross salary
- Contract type of the employee
- Company Agreement
- Income tax rate
To calculate your net salary, you must know your gross salary and the type of contract you have since, for example, Social Security contributions vary for temporary and permanent contracts.
What is net salary calculator?
A net salary calculator is a tool that allows you to obtain the monthly net salary based on the information corresponding to the work and family situation of the worker, the current personal income tax, and the withholdings that apply. The result is indicative and not binding, as it may vary because of regulatory changes or changes in the worker’s situation. In addition, it is applied in the common tax regime and not the regional ones.
SALARY CALCULATOR
- Annual gross
- Number of payments
- Type of contract
- Less than a year
- Number of children
- Type of taxpayer (?)
TO
Calculate Clear
- Monthly salary
- Net extra pay
- I.R.P.F.
What does the net salary depend on?
Net salary depends first on Social Security withholding. Workers have withheld a percentage of their gross salary as Social Security contributions, which vary depending on the type of contract (temporary or indefinite).
Secondly, personal income tax withholding is, broadly speaking, an amount that the company deducts from the payroll as an advance for the payment of personal income tax. When the worker makes his income statement, he can go out to pay (if the withholding has been less than what he had to pay for this tax) or to return (if more money has been withheld than was due to his situation). The percentage withheld depends on the gross salary received and each employee’s situation (single, married, with children).
FREQUENT ASKED THE QUESTIONS (What is net salary?)
What is net salary?
It is the net remuneration that the worker receives after applying tax withholdings and the payment of social contributions to his total salary.
What is gross salary?
It is the total salary that the company allocates to a worker before the corresponding withholdings, and social contributions are made.
How to know the net salary of a worker?
The monthly net salary that the worker receives on his payroll is the result of applying the corresponding withholdings and social contributions to his gross salary, which depends on his employment situation (his level of income) and family (whether he has dependent children, For example).
What is the difference between gross salary and net salary?
The main difference is that the gross salary represents what the company pays the worker in total, and the net salary is what the employee receives after complying with their tax and Social Security obligations.
What withholdings affect the worker’s salary?
The withholdings that affect the worker’s salary are:
- Personal income tax
- Social security contributions
Hope to understand what is net salary and how to calculate your monthly net salary from your annual gross salary.
Read also: How to Calculate Math of Personal Finance?
