The amount of salary is one of the most important elementsóin a job advertisement. The gross amount most often appears in the offers. However, this is not the amount thatóyou will ultimately get in your account every month. It is worth knowing howób to convert the gross amount to net and thus know how much we will be paid in sickness, health or disability contributions, as well as how much tax will be deducted from the salary each month. Howób to calculate the net salary amount?
Gross salary — what does it consist of?
On the Internet you will find many salary calculatorsóre that allow you to make the necessary calculations. However, it is important to first know what goes into the gross salary, or total wage. Gross salary is the amount before deducting Social Security contributions and advance income tax. The gross amount consists of, firstly, the net salary thatór an employee receives in his account every month, and secondly, it will be the sum of social security contributions.
This includes pension, disability, sickness and accident contributions. Opróon top of this, there is also a health contribution. The percentages of each of these contributions can be found, for example, on the Social Security website. They are updated every year, as they also increase every year. Another amount to be deducted is the advance payment of income tax, but here there are some conveniences for, among others, young people just starting their professional lives, but not only, because the new regulations of 2022 extended the possibility of benefiting from PIT 0 rów also to other employeesów. Who else is affected by the income tax exemption?
How much is the payroll tax?
The year 2022 for employeesów involved a change in salaries, as new government regulations came out in July to reduce the effects of inflation. For the current year, these regulations will continue to apply, meaning that the payroll tax will be 12% for a tax threshold of no more than PLN 120,000 in incomeów. Earnings higher than that are taxed at a rate of 32% on the excess earned over PLN 120 thousand. All the time, an exception is made for people under the age of 26, whoóre exempt from taxation and enjoy zero PIT. This means that until they reach the age of 26, their net salary is higher than it will be after that age.
Also exempt from income tax will be employees whoóre parents of at least 4 children or retirees whoóers who, despite being eligible for a pension, give it up, choosing to continue their working lives. The above-mentioned provisions on payment of 12% income tax apply not only to employeesóon an employment contract, but also to contractorsów, retireesów or entrepreneursów. The same is true of the monthly obligation to pay Social Security contributions.
Contributions paid from gross salary
Whether one is an employee or an entrepreneur, one is required to pay Social Security contributions every month. For entrepreneursów, however, it is different when it comes to paying sickness premiums, whichóra for an employee is mandatory. For an entrepreneur, it is voluntary and can be waived with the consequence that if you get sick and are on L4, Social Security will not pay any money for that period. Entrepreneurs pay the contributions in full on their own, while in the case of employeesów they are paid in part by the employee and in part by the employer.
Contributions deducted from wages, whichóre affecting what sum you will eventually get on hand, i.e. net, include pension insurance, disability insurance, sickness insurance, accident insurance and health insurance. There is also a mandatory contribution to the Labor Fund. There are also contributions to the Bridging Pension Fund or Guaranteed Employee Benefits Fund, whichóre no longer applicable to all employeesóand before approaching the subject of calculating your salary, it is worth figuring out whether these contributions apply to you. How to get down to such calculations of net salary from the gross amount given by the employer?
How to calculate a net, or "on-hand", paycheck?
Calculating the net salary is nothing more than calculating the Social Security contributions paid for the employee and estimating the amount of income tax paid. On this basis, the amount thatór the employed employee receives in his account is finally determined. Once we know what the gross amount will be for a particular employee, it is necessary to calculate the social security contribution and deduct it from the gross salary. This involves subtracting the part financed by the employee. This will be a pension contribution of 9.76%, a disability contribution of 1.50% and a sickness contribution of 2.45%. After subtracting these contributions, in turn, we get the basis for calculating the health insurance contribution of 9% of the base from 2022. The tax on the payout, or advance income tax, is then calculated. After subtracting from the gross amount of contributions and the costóof incomeów (the usual amount is PLN 250), you get the amount thatóra is the taxable base. The result obtained is rounded up and then multiplied by 12% in the case of personsób in the first tax threshold.
Examples of calculating gross vs. net salary
For ordinary deductible expensesós, a single tax credit and the first tax bracket, an example calculation can be assumed as follows:
The following is an example.
- PLN 3490 gross is net 2,709.48
- 3600 PLN gross is net 2 783,86
- 4,000 PLN gross is net 3,056.96
- 5,000 PLN gross is net 3,738.19
- 5500 zł gross is net 4 078, 81
- 6,000 PLN gross is net 4,420.43
- 7000 PLN gross is net 5,101.67
The above calculations apply to situations in whichórej employee is not subject to income tax exemption and pays contribution to the Guaranteed Employee Benefits Fund and Labor Fund.
The difference between the gross and net amount, as you can see, is sizable, which gives rise to the idea in many employeesów that they prefer not to know how much they are giving back to the state each month. However, it is useful to know what costs we incur each month and what they are used for.