Gross vs net salary
- Gross salary — basic salary plus cash allowances (and any bonus), before anything is deducted. Job offers and contracts usually quote gross pay.
- Net salary — gross salary minus deductions. It is also called take-home pay.
The formula
- SSNIT = 5.5% × basic salary (capped at the maximum insurable earnings)
- Taxable income = basic salary + taxable allowances − SSNIT
- PAYE = tax on each band of taxable income, added together
- Net salary = gross salary − SSNIT − PAYE
- Basic salary
- GH₵8,000.00
- = Gross salary
- GH₵8,000.00
- − SSNIT (5.5% of basic)
- GH₵440.00
- = Taxable income
- GH₵7,560.00
- − PAYE on taxable income
- GH₵1,488.50
- = Estimated take-home pay
- GH₵6,071.50
PAYE detail: GH₵490.00 × 0% + GH₵110.00 × 5% + GH₵130.00 × 10% + GH₵3,166.67 × 17.5% + GH₵3,663.33 × 25% = GH₵1,488.50
Common mistakes
- Applying one tax rate to the whole salary. PAYE is progressive: only the income inside each band is taxed at that band's rate.
- Charging SSNIT on allowances. SSNIT is based on basic salary only.
- Taxing income before SSNIT. Your SSNIT contribution is deducted first, which lowers your PAYE.
- Dividing annual tax by 12 incorrectly. Employers deduct PAYE monthly, so work out the monthly salary first.
Going the other way: net to gross
If you know the take-home pay you need, the net-to-gross calculator works out the gross salary that delivers it. This is useful when negotiating — see our salary guide.