Net to Gross Calculator
Net vs. Gross: Key Differences
The terms net and gross describe amounts before or after taxes/deductions, but their meaning depends on context:
- Net = Base amount before adding tax (e.g., VAT) or after deducting tax (e.g., income tax).
- Gross = Total amount after adding tax or before deductions. Net to Gross Calculator
Examples:
- Sales Tax (VAT):
- You sell a chocolate bar for $40 (net price) + 25% tax.
- Gross price = $40 + ($40 × 25%) = $50.
- Here, tax is calculated on the net amount.
- Income Tax:
- Your gross salary is $50, with 20% income tax.
- Net salary = $50 – ($50 × 20%) = $40.
- Here, tax is deducted from the gross amount.
Key Insight: The same numbers ($40 net, $50 gross) can represent different tax rates (25% vs. 20%) because the base for calculation changes.
Gross Pay vs. Net Pay
- Gross pay: Earnings before taxes/deductions.
- Net pay: Take-home pay after deductions (tax, insurance, retirement).
Regional Differences:
- U.S.: Deductions include income tax, Medicare, Social Security, and optional benefits (e.g., 401(k)).
- Poland: Higher social security contributions (medical, disability, pension) often exceed income tax.
Tare vs. Gross Weight vs. Net Weight
Common in packaging/shipping:
- Net weight: Product weight alone (e.g., 500g of coffee).
- Tare weight: Container weight (e.g., jar, truck).
- Gross weight: Total (net + tare).
- Formula: Gross = Net + Tare
Example:
A jar of jam weighs 300g (net) + 200g (tare) = 500g (gross).
Gross Profit vs. Net Profit
| Metric | Calculation | Purpose |
|---|---|---|
| Gross Profit | Revenue – Cost of Goods Sold (COGS) | Measures production efficiency. |
| Net Profit | Revenue – All costs (COGS, taxes, overhead) | “Bottom line” profitability. |
Example:
- Revenue: $100,000
- COGS: $40,000 → Gross profit = $60,000
- Overhead/taxes: $20,000 → Net profit = $40,000