Net to gross formula
This article explains how to gross up a paycheck, or create a paycheck for zero net amount.
You will gross up a paycheck in order for the business to cover the employee and employer tax liability.
You need to pay an employee a certain net amount.
- the net amount
- the taxes to be withheld
The basic formula to gross up an amount is:
Net amount + flat tax amounts / (100% - total percent of taxes) = Gross
- Total the tax percentages: Social security 6.2% + Medicare 1.45% = 7.65%
- Subtract the total from 100%: 100-7.65 = 92.35
- Convert that number to a percentage by moving the decimal two positions to the left: 0.9235
- Add $100 from FIT to the net: $100 + $200 = $300
- Divide the new net amount by the amount in step 3: 300 / .9235 = 324.85
- The gross amount to be used is $324.85. The net amount will be $200 after withholding social security, Medicare, and $100 for FIT.