Two offers land in your inbox the same week. The first quotes $90,000 a year. The second quotes $85,000 plus a "better benefits package." Most people start the comparison there — by lining up the salary numbers — and then forget that the salary number is rarely what you actually receive. Take-home pay is.
Why headline salary is the wrong starting point
Headline salary is a gross figure. Before any of it reaches your account, it gets reduced by federal income tax, state income tax, Social Security, Medicare, retirement contributions, and benefit-plan premiums. Two employers can offer the same gross and produce different net pay because the deductions differ — sometimes by a couple hundred dollars per pay period, sometimes by far more.
If you're picking between offers, the comparison that matters is what arrives in your bank account each month, plus the dollar value of what you don't see in your paycheck. Use the Take-Home Pay Calculator as a starting point to model net pay for each offer separately, before you start comparing them.
Step 1: Estimate net pay for each offer
Run the take-home pay calculator twice — once for each offer. Use the same pay period (monthly is usually easiest) and the same federal and state tax assumptions if both jobs are in the same state. Plug in the salary, the retirement contribution percentage you actually plan to make at each employer, and the per-period health insurance premium each plan would cost you.
You'll typically find that the difference in net pay is smaller than the difference in gross. A $5,000 gap in headline salary often translates to something like $2,500–$3,500 net per year, depending on your tax bracket. That smaller number is what you should be comparing — not the gross.
Step 2: Add the dollar value of benefits beyond cash
Some of the most important compensation never shows up in the paycheck calculator at all. Three categories typically matter most:
- 401(k) match. If one employer matches 5% of salary and the other matches 3%, that's 2 percentage points of your salary in extra retirement contributions. Treat it as deferred compensation; on a $90,000 salary, that's $1,800 a year you don't see in cash but should count.
- Health insurance premiums and coverage levels. The premium difference is in the take-home calculator already, but the deductibles, coinsurance, and out-of-pocket maximums aren't. A plan with a $1,000 deductible is meaningfully different from one with a $5,000 deductible if you have family medical needs.
- Paid time off and parental leave. Two extra weeks of PTO is roughly 4% of your salary. If one offer has 4 weeks and the other has 2, that gap is real money — about $3,500 a year on a $90,000 salary.
It's also worth considering non-cash items that may matter to you: equity grants if applicable, professional development budgets, remote-work flexibility (which has a real dollar value if it eliminates commuting cost), and the stability of the company itself.
Step 3: Account for the geography difference
If the two offers are in different states or different cities, the comparison gets more complicated. State income tax rates vary widely. State and local taxes alone can shift the comparison by thousands of dollars per year on the same gross salary. Cost of living — especially housing — can swing the picture even further.
For a quick check of the federal and state tax piece, use the Tax Bracket Calculator with each location's rates. For cost of living, you'll want to layer in housing, transport, and tax differences before drawing a conclusion. A $5,000 nominal raise in a higher-tax, higher-cost city can be a real-dollar pay cut.
This effect is most pronounced when comparing a city with no state income tax to a city with high state and local rates. The same gross salary in two such cities can differ by 5–10% in net take-home alone, before you even start factoring in housing or commute costs. Don't make the mistake of treating gross as a fair comparison across geographies; it almost never is. If one of the offers is remote, also factor in the dollar value of not commuting — a daily commute often costs hundreds of dollars per month in transport, parking, and time, and that figure rarely shows up explicitly in either offer letter.
Step 4: Build a simple side-by-side worksheet
Once you have the numbers, line them up. A useful comparison worksheet has four rows:
- Net monthly pay from the take-home calculator.
- Annualized 401(k) match value (employer contribution percentage times salary, divided by 12 for the monthly equivalent).
- Annualized PTO value (weeks of PTO times weekly gross pay, divided by 12).
- Net monthly housing-and-transport cost, if the locations differ.
Add the first three, subtract the fourth. The number you're left with is a more honest "what this job actually pays me each month, after taxes and benefits" figure than headline salary. If you want to also factor in long-term retirement savings differences, run each scenario through the Retirement Savings Calculator with the matching contribution percentages — small match differences compound meaningfully over a career.
What this won't tell you
A worksheet captures cash. It doesn't capture career-trajectory considerations: whether one role accelerates your skills, whether the team is one you'd actually enjoy working with, whether the company's prospects are stable. It doesn't capture stress, commute quality, or how flexible each manager would be when life happens.
The right way to use this kind of analysis is as a tiebreaker, not a verdict. If the financial difference is small (within a few hundred dollars per month), the non-financial factors should drive the decision. If the financial difference is large (multiple hundreds per month, or significant equity and 401(k) match differences), the math matters more — but it still doesn't override how much you'd actually like doing the work.
This is an educational guide, not personalized financial, tax, or legal advice.