Your offer says $80,000. Your bank account sees around $56,000. The missing $24k didn’t vanish — it went somewhere specific, in a predictable stack. Once you see the layers, the gap stops being a surprise.
Where the money goes
- Federal income tax — ~10–22% effective for most W-2 workers. Progressive brackets mean the rate rises with income, but the effective rate (total tax ÷ total income) is almost always lower than the top bracket.
- State income tax — 0% (nine states) up to ~10%+ (California, Hawaii, New York). The single biggest variable when comparing offers across states.
- FICA (Social Security + Medicare) — a flat 7.65% up to the SS wage base, then 1.45% above it. Everyone pays this.
- Pre-tax benefits — 401(k) contributions, health insurance premiums, FSA/HSA, transit. These lower taxable income but lower take-home too.
- Post-tax deductions — Roth 401(k), garnishments, union dues, supplemental insurance.
The 70% rule
For typical middle-income W-2 workers, net settles around 65–75% of grossafter federal, state, FICA, and standard benefits. Use 70% as your budgeting default and you’ll be within 5% of the real number — close enough for planning rent, groceries, and savings.
An $80k example
$80,000 gross. Federal ~$9,600 (12% effective). State ~$3,200 (4%). FICA $6,120 (7.65%). Health insurance $2,400. 401(k) 5% = $4,000. Net: ~$54,680 — or about 68% of gross. The 401(k) isn’t lost — it’s in your retirement account — but it’s not in your checking account either.
Hourly, weekly, annual — all the directions. Then apply the 70% rule for a take-home estimate.