Transparent method
The formula
Worked example
Example inputs
How to interpret the result
Delivering a specific net amount to someone requires paying more than that amount, since taxes and withholding come out before the recipient sees anything. The gross figure needed isn't simply the net plus a flat percentage, because the withholding itself is calculated on the larger, grossed-up amount, not on the original net target.
Before you rely on it
What to check
Confirm the actual withholding rates that will apply to the payment before finalizing a gross-up figure, since guessing at the rate produces a net amount that misses the target.
The common error
Where people go wrong with payment gross-up calculator
Adding a flat percentage to the desired net amount instead of solving for the gross that nets out correctly after withholding. That shortcut consistently under-delivers the intended net amount.
Sensitivity evidence
How combined withholding rate changes the required gross payment
| Combined withholding rate | Required gross payment | Estimated withholding |
|---|---|---|
| 26.0% | $6,757 | $1,757 |
| 28.0% | $6,944 | $1,944 |
| 30.0%worked example | $7,143 | $2,143 |
| 32.0% | $7,353 | $2,353 |
| 34.0% | $7,576 | $2,576 |
Every input, tested
Which input moves the required gross payment most
| Input | Tested from | To | Required gross payment at each end | Swing |
|---|---|---|---|---|
| Desired net payment | $4,500 | $5,500 | $6,429 to $7,857 | $1,429 (20%) |
| Combined withholding rate | 28.0% | 32.0% | $6,944 to $7,353 | $408 (5.7%) |
Two variables at once
Required gross payment by combined withholding rate and desired net payment
| Combined withholding rate \ Desired net payment | $4,000 | $5,000 | $6,000 |
|---|---|---|---|
| 26.0% | $5,405 | $6,757 | $8,108 |
| 28.0% | $5,556 | $6,944 | $8,333 |
| 30.0% | $5,714 | $7,143 | $8,571 |
| 32.0% | $5,882 | $7,353 | $8,824 |
| 34.0% | $6,061 | $7,576 | $9,091 |
Step by step
The worked example, input by input
| Input | Value used |
|---|---|
| Desired net payment | $5,000 |
| Combined withholding rate | 30.0% |
| Required gross payment | $7,143 |
| Estimated withholding | $2,143 |
Where the inputs come from
Desired net payment is the amount you want the recipient to receive after taxes, and the combined withholding rate is the total percentage taken out: federal, state, and payroll taxes, from the payer's payroll settings. The gross-up divides the net amount by one minus the rate, because withholding applies to the larger gross figure. Use the supplemental wage rate for a one-time payment such as a bonus or relocation reimbursement.
When the result stops applying
Gross-ups increase the employer's cost and taxable income, and withholding rates can differ from the final tax owed. A gross-up on a large payment may push the recipient into a higher bracket, which the flat rate ignores. Some payments cannot be grossed up under plan or legal rules. The employer's payroll tax adds to the true cost.
What to compare it with
See withholding on the bonus tax calculator, and the take-home effect on the paycheck page. The moving cost and severance runway calculators show payments that may need gross-up. The employee cost calculator adds the employer's payroll taxes to the total cost.
People also ask
Frequently asked questions
Why not just add the tax rate to the net amount?
Because tax is charged on the gross payment, so the net you receive is less than the gross by the full rate. Dividing by one minus the rate reaches the desired net.
Who pays for a gross-up?
The payer, usually an employer, which bears the extra payroll tax as well as the higher payment.
Are pay gross-ups common?
They are used for relocation, awards, some settlements and executive benefits, but many employers avoid them because of the added cost.