Salary Calculator: How It Works
A salary calculator converts between the numbers people actually use — hourly, monthly, annual, gross and net — and shows where the gap between an offer and a payslip comes from. The gap is usually 20–40%, and almost none of it is a surprise once you know what to look for.
The conversions
| From | To | Multiply by |
|---|---|---|
| Hourly | Annual | hours per week × 52 |
| Hourly | Monthly | hours per week × 52 ÷ 12 |
| Annual | Monthly | ÷ 12 |
| Annual | Weekly | ÷ 52 |
| Annual | Fortnightly | ÷ 26 |
| Annual | Hourly | ÷ (hours per week × 52) |
The frequent error is dividing an annual figure by 4 to get a weekly one. There are 52 weeks in a year, not 48, so a month averages 4.33 weeks. Paid fortnightly, you receive 26 payments a year — which means two months each year contain three paydays. Budgeting on 'two payments a month' quietly understates your annual income and overstates each month's.
Where gross becomes net
| Deduction | Typically |
|---|---|
| Income tax | Progressive; the largest single item for most earners |
| Social insurance / national insurance / FICA | Often 6–12% of pay, sometimes capped above a ceiling |
| Retirement or provident fund | Commonly 5–12%, frequently matched by the employer |
| Health insurance premium | Fixed monthly amount, often pre-tax |
| Professional or local tax | Small fixed amount in some jurisdictions |
Some deductions are taken before tax is calculated and some after, and the order changes your net pay. Retirement and health contributions are commonly pre-tax, which means each unit contributed costs you less than a unit of take-home pay — a pre-tax contribution of 1,000 at a 30% marginal rate reduces net pay by only 700.
CTC is not salary
Where employers quote 'cost to company', the figure includes items you never receive as cash: the employer's own retirement contribution, gratuity provisions, insurance premiums, and sometimes an estimated bonus. A CTC of 12,00,000 might produce a gross monthly salary near 85,000 and a net near 68,000. When comparing offers, compare net monthly cash plus the value of benefits you would otherwise buy yourself — not headline CTC.
Comparing two offers properly
- Convert both to the same period.
- Estimate net pay for each, using the correct tax treatment.
- Add the cash value of benefits you would otherwise pay for — health cover, retirement match, transport, meals.
- Subtract costs the job imposes — commuting, relocation, required equipment, unpaid overtime expressed as an effective hourly rate.
- Divide by actual hours worked to get a true hourly figure.
An offer 15% higher that adds ten hours a week and an hour of daily commuting is usually a pay cut per hour. Running step five is the fastest way to see it.
Overtime and irregular pay
Overtime multipliers vary by jurisdiction and contract — 1.5× beyond a weekly threshold is common, with 2× for rest days or holidays in many systems. Because overtime is added to your ordinary income, it is taxed at your marginal rate, which is why the take-home from extra hours often feels smaller than expected.
Raises and inflation
A raise below inflation reduces your real income. At 6% inflation, a 4% raise leaves you about 1.9% worse off in purchasing power. When evaluating an increase, compare it against inflation first and against your marginal tax rate second — the after-tax, after-inflation figure is the only one that changes your life.