How RealWage Calculates Your Real Take-Home Pay

Last updated: September 10, 2026

"Real net hourly wage" isn't a marketing phrase — it's a specific number RealWage computes from what you enter, using the exact steps below. This page shows the actual formulas and the actual tax, mileage, and payroll-tax figures the calculator uses, so you can check the math yourself or decide how much to trust it. Gig and Salary income use different formulas, because a self-employed driver and a W-2/T4 employee owe genuinely different taxes on the same gross dollar — both are covered here.

The core idea

Whatever you get paid, and whatever comes out of it before it's really "yours," real net hourly wage is always:

Real net hourly wage = (What you actually keep) ÷ (Hours you actually worked)

Everything below is just how RealWage estimates "what you actually keep" for two very different income types.

Gig income: the 7-step calculation

Gig mode (rideshare, delivery, courier) runs your inputs through seven steps, in this order:

1. Fuel consumption. Distance driven divided by your vehicle's fuel efficiency (miles ÷ MPG, or kilometres ÷ 100 × L/100km).
2. Vehicle operating overhead. (Fuel consumption × fuel price) + (distance × a per-mile/per-km maintenance reserve, covering tires, repairs, and general wear).
3. Taxable mileage allowance. Distance × the region's standard mileage deduction rate (see the table below) — the amount the IRS or CRA lets you deduct from taxable income for business driving.
4. Net operating profit. Gross payout minus vehicle operating overhead.
5. Estimated tax reserve. max(0, net operating profit − mileage allowance) × a combined federal-plus-state/provincial tax rate. The mileage allowance reduces the profit that's actually taxed, same as it would on a real return.
6. True net take-home. Net operating profit minus the estimated tax reserve.
7. Real net hourly wage. True net take-home ÷ hours worked.

Salary or wages: the payroll-tax-aware calculation

Salary mode runs a different, shorter model, because a W-2 (US) or T4 (Canada) employee has no vehicle expenses and no mileage deduction — the two taxes withheld from a paycheque are the only deductions that apply:

1. Normalize to a weekly figure. A monthly salary is divided by 4.33 (the average weeks per month) so weekly, monthly, and annual projections all derive from the same base number.
2. Payroll tax reserve. Weekly gross × the employee's payroll tax rate — FICA (Social Security + Medicare) in the US, CPP + EI in Canada. This is the employee's share only; an employer's matching share is never deducted from your pay and isn't part of this estimate.
3. Income tax reserve. Weekly gross × a combined federal-plus-state/provincial income tax rate, using a smaller federal baseline than Gig mode's (see why below).
4. Net take-home. Weekly gross minus payroll tax reserve minus income tax reserve.
5. Real net hourly wage. Net take-home ÷ hours worked that week.

Why Salary mode's federal baseline (10% in both the US and Canada) is so much lower than Gig mode's (25% US / 22% Canada): the gig baseline already bundles in a full 15.3% self-employment tax reserve, which a self-employed driver owes on both the "employee" and "employer" halves of Social Security/Medicare (or the equivalent CPP/EI). A salaried employee only ever pays the employee half, which is already broken out separately as its own payroll-tax line item above — folding it into the income-tax baseline too would double-count it.

Where the numbers come from: US and Canada

RealWage has researched, cited figures for exactly two countries. Every rate below is a real, current published figure, not an invented placeholder:

The state and provincial add-on rates are single flat figures meant to approximate each region's effective rate at typical gig/salary income levels — they are simplifications of real, tiered tax brackets, not the brackets themselves. Every one of these figures is a planning estimate for a given tax year and can change; check the current-year numbers against the IRS, the CRA, or your state/province before relying on them for anything beyond a quick estimate. See the FAQ for more on specific edge cases (waiting-time mileage, quarterly tax reserves, standard vs. actual-expense deductions).

Everywhere else: honest zeros, not invented numbers

Outside the US and Canada, RealWage does not have a researched tax rate or a standard mileage/distance allowance for you — and it will not pretend to. Selecting the "Global" region defaults your tax reserve rate, distance-allowance rate, and maintenance rate to zero, with all three fully editable so you can enter your own country's actual figures if you know them. A wrong number that looks official is worse than an honest blank one, so RealWage would rather show you a zero it's honest about than a plausible-looking figure it made up. Global mode does support close to 150 world currencies and both metric and imperial units, so the calculator itself works everywhere — it's specifically the tax and mileage guidance that stays scoped to the two countries it has actually researched.

What this is, and isn't

RealWage is a planning tool: a fast, transparent way to see your real net hourly wage so you can judge whether a shift, zone, platform, or job offer is actually worth it, and a reasonable ballpark for what to set aside for taxes as you go. It is not a substitute for the actual IRS or CRA forms, official government calculators, or a licensed tax professional when it's time to file. Every figure above is disclosed so you can decide for yourself how much to trust it — nothing here is hidden inside a black-box calculation.

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