The best way to calculate the salary
By signing the employment contract we agree to receive salary in the specified amount. However this is a gross amount, which means that „on hand” you will get less. This article shows you how to calculate your net salary and explains what are the mandatory charges.
Deduction of social security premiums
The employer is obliged to pay ZUS premiums for each employee hired under an employment contract. There are contributions for social insurance, where we distinguish pension contributions (9.76%), disability (1.5%) and illness (2.45%). In fact the percentage rates are higher but their part is covered by the employer so it does not affect the employee salary.
When calculating the net salary one should also take into account that the Social Insurance contributions include also the health contribution which is 9% of the gross salary minus social contributions. In case of the lowest salaries which are received by people employed part time it may happen that health contribution will be limited to the amount of advance income tax.
Advance payment of income tax
Another obligatory component of gross salary is the advance payment for income tax. Determining the basis for its calculation is possible after deducting from gross salary social contributions and deductible costs (250 PLN in the case of a local employee and 300 PLN in the case of a commuter). The result should be multiplied by the appropriate tax rate (17% or 32%) and then the tax-free amount (43.76 PLN) should be subtracted from the result obtained. The tax calculated in this way must be additionally reduced by the health insurance contribution, but only in the amount of 7.75% of the contribution assessment basis. As a result of making this deduction you will receive the due advance payment for income tax.
Calculating net salary – example
In practice calculating your salary „on hand” is very simple. The example below shows how to calculate your net salary step by step.
Gross salary is 5000 PLN.
We calculate the social contributions:
- pension contribution: 5000.00 x 9.76%= 488.00 zł
- disability contribution: 5000.00 x 1.5%= 75.00 PLN
- sickness contribution: 5000.00 x 2.45% = 122.50 zł
The total amount of social contributions is PLN 685.50.
We calculate the health contribution:
- 5000.00 PLN – 685.50 PLN = 4314.50 PLN
- The basis of the health insurance premium assessment is: PLN 4314.50
- 4314.50 PLN x 9% = 388.31 PLN
Health contribution is 388.31 PLN.
We calculate the advance income tax:
- Salary less social security contributions is: PLN 4314.50
- Cost of obtaining: PLN 250.00
- 4314,50 – 250,00 PLN= 4064,50 PLN. Round up to 4065.00 PLN
- In the example it has been assumed that the employee is subject to the first tax threshold – 17%
- 4065.00 PLN x 17% = 691.05 PLN
- From the result we subtract the tax-free amount, ie: PLN 43.76
- PLN 691.05 – PLN 43.76 = PLN 647.29
- 4314.50 PLN x 7.75%= 334.37 PLN
- 647.29 – 334.37 = 312.92 zł
The advance payment for income tax rounded up to full zloty amounts to 313 PLN.
We are calculating the net salary:
5000,00 – 685,50 – 388,31- 313,00 = 3613,19 zł
Net salary based on the example is 3613.19 PLN.