How to Calculate Gross to Net Pay in Excel

Build a simple payroll: gross pay from hours and rate, payroll taxes from rate cells, and net pay after a pre-tax retirement contribution.

You will learn to

• Calculate gross pay from hours and rate
• Apply tax rates held in input cells
• Calculate net pay with a pre-tax deduction

How it works

Net pay is what lands in the employee’s account: gross pay minus deductions. Gross pay for hourly staff is hours × rate. Keep every tax rate in its own labelled cell and reference it, so when rates change you update one cell rather than every formula.

Order matters with pre-tax deductions. A traditional 401(k) contribution comes out before income tax, so income tax is charged on gross minus the contribution — but Social Security and Medicare are still charged on the full gross. This simplified model uses flat withholding rates; real withholding depends on each employee’s tax forms.

=B3*C3*(1-D3)*(1-J1-J2)-B3*C3*(J3+J4)