[Updated 2024] How to calculate Gross to Net salary accurately

Understanding how to calculate Gross salary to Net helps workers grasp their actual income and ensure their rights during the working process. In the article below, 1C Vietnam will provide detailed updated information on the salary calculation formula from Gross to Net according to the latest regulations in 2024. Refer now!

1. What is Gross and Net Salary?

Gross salary is the employee's total monthly income received from the business before deducting insurance costs, personal income tax (PIT) and other deductions. Gross salary includes basic salary, allowances, allowances, commissions,...

Net salary is the actual amount of money the employee receives after deducting insurance costs, personal income tax and other deductions (if any). Thus, Net salary is also understood as the actual salary or after-tax income that the employee can "pocket".

2. How to calculate Gross to Net salary accurately in 2024

Below is the exact Gross to Net salary calculation in 2024 that businesses and workers can refer to:

2.1. Formula to convert Gross salary to Net

To calculate actual salary received (Net salary) from pre-tax salary (Gross salary), employees and businesses need to clearly understand the expenses and apply the following Gross to Net salary conversion formula:

Net Salary = Gross Salary - (Compulsory insurance + PIT)

In there:

• Compulsory insurance costs account for 10.5% of salary (based on Decision 595/QD-BHXH issued by Vietnam Social Insurance in 2017). This cost includes:

• Social insurance (social insurance): 8%
• Health insurance (health insurance): 1.5%
• Unemployment insurance (UI): 1%

• Personal Income Tax (PIT):

Personal income tax = Taxable income x Tax rate

In there:

• Taxable income is taxable income after deducting deductions.

• Taxable income is the total income from salaries and wages received after deducting tax-exempt amounts.
• Family deduction: The deduction for the taxpayer himself is 11 million VND/month, the deduction for each dependent is 4.4 million VND/month.

(Pursuant to Resolution 954/2020/UBTVQH14 issued by the National Assembly Standing Committee)

• Tax rate: Applied according to the current personal income tax rate table (Pursuant to Circular No. 111/2013/TT-BT issued by the Ministry of Finance in 2020).

The specific tax rates to calculate personal income tax in 2024 are as follows:

2.2. Illustration

Suppose a person receives a gross salary of 25 million VND/month and has 1 dependent. According to current regulations, employees need to pay the following amounts:

Compulsory insurance payment

• Social insurance: 8% x 25,000,000 = 2,000,000 VND
• Health insurance: 1.5% x 25,000,000 = 375,000 VND
• Unemployment insurance: 1% x 25,000,000 = 250,000 VND

=> Total: 2,625,000 VND

Personal income tax (PIT)

• Family deduction for yourself: 11,000,000 VND/month.
• Dependent deduction: 4,400,000 VND/month/person.
• Taxable income = 25,000,000 - 2,625,000 - 11,000,000 - 4,400,000 = 6,975,000 VND.
• Personal income tax rate according to level 1: Taxable income up to 10 million VND, tax rate 10%

Therefore, personal income tax = (5,000,000 x 5%) + (1,975,000 x 10%) = 447,500 VND

Finally, the employee's actual salary will be:

Food received = 25,000,000 - (2,625,000 +447,500) = 21,927,500 VND

Thus, with a Gross salary of 25 million VND/month, with 1 dependent, your actual salary is 21,927,500 VND/month.

3. Should I choose Gross salary or Net salary?

As analyzed, Net salary is the actual amount of money the employee receives after the business has deducted social insurance, health insurance, unemployment and personal income tax fees. In contrast, Gross salary is total income before deducting these fees. So should you choose Gross salary or Net salary? This needs to be viewed from two specific angles:

• Business perspective:

Net salary payment is preferred by many businesses because it will help businesses easily manage and calculate employee-related fees. However, the issue of choosing Gross salary or Net salary also depends on many factors within the company.

• Employee perspective:

If you choose Gross salary, the employee will be guaranteed to pay the correct salary and receive equivalent benefits, but will have to calculate it themselves and work with the tax authorities which is relatively complicated. On the contrary, when choosing Net salary, there may be a situation where the company does not comply with the law, leading to the employee's rights being affected. In general, in cases where companies comply with the law, pay salaries as well as pay the correct insurance premiums and personal income taxes, then whether they receive Gross salary or Net salary, the level of benefits employees receive is the same.

4. Excel table converting Net salary to Gross

Below is an Excel table to help businesses and employees easily convert Net salary to Gross, supporting salary calculation quickly and accurately:

Immediately download the Excel table to support Gross Net salary calculation here .

Thus, the article explains information about Net salary and Gross salary, and provides detailed instructions on how to calculate Gross salary to Net according to the latest regulations. For businesses that are having difficulty managing employee salaries, look to the 1C:Company Management solution, featuring flexible salary calculation features, allowing multiple salary levels and salary calculation types to be declared. and salary calculation formula for each employee. At the same time, the software will also automatically calculate administrative salary, insurance and personal income tax. Contact Hotline immediately: (+84)247 108 8887 for support from 1C Vietnam.