Gross vs net: the gap that surprises everyone

The salary you negotiate is gross: the full annual figure before anything is taken out. The salary you live on is net, the take-home pay that survives income tax and the compulsory contributions that fund pensions, healthcare, and unemployment insurance. The gap between the two is rarely small, and it is wildly different from country to country. A 120,000 gross salary keeps a very different share of itself in Austin, in London, and in Berlin, because each jurisdiction stacks its taxes and contributions differently. The point of this tool is to make that gap visible before you sign, relocate, or compare two offers, so you are reasoning about money you can actually spend rather than a headline that flatters one country over another.

Income tax in almost every country is progressive, which means it is applied in slices. The first band of your income is taxed lightly or not at all thanks to a personal allowance or tax-free threshold; each higher band is taxed at a steeper marginal rate. This is why your effective rate, the total tax as a share of gross, is always lower than the top marginal rate you hit. The calculator works the bands from the bottom up exactly as the tax authority does, so the effective rate it reports is the honest blended figure, not the scary headline number at the top of the table.

The two layers: income tax and social contributions

Most people focus on income tax and forget the second layer, which often bites harder at middle incomes. Mandatory social contributions, Social Security and Medicare in the US, National Insurance in the UK, the social-insurance package in Germany, pension and health levies across the Nordics, are usually charged as a flat percentage of earnings, often up to a ceiling. Because they are flat rather than progressive, they take a proportionally larger bite from a mid-level salary than from a very high one, which is the opposite of how income tax behaves. The take-home bar in the result separates these two layers so you can see whether tax or contributions is the bigger drag on your particular salary in your particular city.

Some countries fold almost everything into a single income-tax figure, while others split it across several named levies. The model normalises all of that into three buckets, income tax, social contributions, and any state, provincial, or local tax, so the comparison across cities is apples to apples even when the underlying systems look nothing alike. A flat US state add-on, a Canadian provincial rate, a Japanese inhabitant tax, and a Swiss cantonal blend all land in the same regional bucket.