Calculate the sum of all assessed taxes, including Social Security, Medicare and federal and state withholding information found on a W-4. Divide this number by the gross pay to determine the percentage of taxes taken out of a paycheck.

Multiply the hourly wage by the number of hours worked per week. Then, multiply that number by the total number of weeks in a year (52). For example, if an employee makes $25 per hour and works 40 hours per week, the annual salary is 25 x 40 x 52 = $52,000.

Gross pay represents your total earnings before any deductions, including base salary, overtime, bonuses, and commissions. Net pay (take-home pay) is the amount deposited to your bank account after subtracting all taxes (federal income tax, state income tax, Social Security, Medicare) and all deductions (401(k), health insurance, FSA). For most employees, net pay is approximately 65-75% of gross pay.