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Does a Base Salary Subtract Payroll Taxes?

by Kristine Tucker

When you get a new job and your employer creates a financial package, she'll offer you a base salary. The base salary or your hourly pay rate doesn't include commissions or benefits such as health insurance, retirement plans, stock options, bonuses, tips or vacation pay. The base salary is your total gross pay before income taxes and Social Security and Medicare taxes are withheld, so it's not the amount you'll actually take home.

Base Salary

A base salary is a financial starting point that guarantees an employee will receive that pay, minus tax withholdings, even if he doesn't get any other financial benefits. Base salaries are a way to level the playing field, so new employees are compensated fairly according to their title and job responsibilities. For example, a base salary ensures that two new salesmen of equal experience and standing get the same standard pay. However, one might make more money on commission by selling more products or services. Or, two new waitresses with similar experience get the same base hourly wage, but one may earn more with tips.

Income Tax

Income tax withholdings are determined by an individual's filing status, number of exemptions and eligible deductions. As a result, two people with the same base salary might not need the same amount of income tax withheld from their paychecks. A base salary is established by an employer, regardless of an employee's state and federal tax obligations. A base salary doesn't already have taxes subtracted from it.

Negotiable

A base salary is negotiable. When you're offered a job and a salary, discuss the terms with your employer. If the employer wants you bad enough, she might be willing to increase the base salary or provide other financial benefits and incentives to entice you to accept the job. Depending on the cost of living in your community, the company's budget and the demand for your services, there may be flexibility with your base salary. It's best to research salaries for similar industry positions to make sure you aren't overselling yourself or undercutting your financial potential.

Changeable

Once you and your employer agree on a base salary, she can't lower that amount without talking to you first. She might raise the amount without your knowledge, but she'll likely discuss raises with you first. If the company is struggling financially, your employer might need to decrease your base salary or reduce your hours, but she'll have to discuss those concerns with you. You may choose to quit if the pay reduction is unacceptable. However, your employer can't under-withhold on your taxes to compensate for her financial difficulties.

About the Author

As curriculum developer and educator, Kristine Tucker has enjoyed the plethora of English assignments she's read (and graded!) over the years. Her experiences as vice-president of an energy consulting firm have given her the opportunity to explore business writing and HR. Tucker has a BA and holds Ohio teaching credentials.

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