Salary Calculator

What Is a Salary Calculator?

This powerful tool provides all the calculations needed to determine gross and net salary, helping you estimate the net salary you will receive after deducting social insurance contributions or adding benefits such as allowances.

Using Daftra’s gross-to-net salary calculator, you can easily find out the actual amount that will be paid into your account after deducting insurance contributions. You can also add different allowances, such as housing allowance, transportation allowance, and any other employee entitlements, giving you a clear and accurate view of the final net salary.

How Does the Salary Calculator Work?

The monthly salary calculator accurately calculates salary by factoring in all salary components. It adds allowances such as housing allowance, transportation allowance, and any other employee entitlements, while also taking social insurance deductions into account based on the employee’s years of service.

All you need to do is enter the required details, such as the basic salary, allowances like housing and transportation, and select the employee’s years of service under the insurance inclusion option. The tool will then calculate the social insurance deduction rate from the salary automatically, giving you fast and accurate results and helping you manage payroll easily without errors.

The calculator applies the insurance deduction rate based on the employee’s years of service as follows:

• In the first year, the monthly insurance deduction rate is 9.75% of the basic salary plus housing allowance only.
• In the second year, the monthly insurance deduction rate is 10.25% of the basic salary plus housing allowance only.
• In the third year, the monthly insurance deduction rate is 10.75% of the basic salary plus housing allowance only.
• In the fourth year, the monthly insurance deduction rate is 11.25% of the basic salary plus housing allowance only.
• In the fifth year, the monthly insurance deduction rate is 11.75% of the basic salary plus housing allowance only.

Once these details are entered, the tool automatically calculates the employee’s net salary after all additions and deductions are applied.

Example

The employee’s basic salary is 5,000 SAR, housing allowance is 1,250 SAR, transportation allowance is 750 SAR, and the employee has worked for 3 years.

Insurance Deduction = (Basic Salary + Housing Allowance) × 10.75%

Insurance Deduction = (5,000 + 1,250) × (10.75 ÷ 100) = 671.88 SAR

Net Salary = Basic Salary + Housing Allowance + Transportation Allowance − Insurance Deduction

Net Salary = 5,000 + 1,250 + 750 − 671.88 = 6,328.12 SAR

How to Calculate Salary

Knowing how to calculate a percentage of salary helps you calculate social insurance deductions and allowances that are sometimes granted as a percentage of the basic salary.

1. Calculating Salary with Allowances

Allowances are additional amounts paid to the employee alongside the basic salary. They are granted to compensate the employee for certain costs related to the nature of their work or professional circumstances, such as housing allowance, transportation allowance, or risk allowance.

To calculate salary after adding allowances, follow this formula:

Gross Salary = Basic Salary + Housing Allowance + Transportation Allowance + Any Other Allowances

Example

If the basic salary is 8,000 SAR, housing allowance is 2,000 SAR, and transportation allowance is 1,000 SAR:

Salary Before Deductions = 8,000 + 2,000 + 1,000 = 11,000 SAR

Daftra offers employee payroll software that allows you to prepare employee payslips quickly and accurately, while calculating total salaries including all earnings and deductions according to each employee’s employment contract.

The system automatically calculates deductions resulting from lateness or absence based on attendance records for the selected period. It also adds sales commissions to sales employees’ salaries according to their target achievement rate.

2. Calculating the Insurance Deduction Percentage from Salary

Understanding the insurance deduction percentage from salary is important for both employees and business owners, as it helps clarify the amount deducted from the salary.

The insurance deduction rate depends on the employee’s years of service. The rate increases as the years of service increase, and it is calculated based only on the basic salary plus housing allowance.

The deduction rates are: First year: 9.75%, Second year: 10.25%, Third year: 10.75%, Fourth year: 11.25%, Fifth year: 11.75%.

To calculate the insurance deduction amount, use this formula:

Insurance Deduction Amount = (Basic Salary + Housing Allowance) × Insurance Deduction Rate Based on Year of Service ÷ 100

Example

If the basic salary is 10,000 SAR, the housing allowance is 2,500 SAR, and the employee has worked for 2 years:

Insurance Deduction Amount = (10,000 + 2,500) × 10.25 ÷ 100

Insurance Deduction Amount = 1,218.75 SAR

3. Calculating Net Salary

To calculate net income accurately, follow these steps:

A) Determine the employee’s basic salary and allowances

Start by adding the basic salary to any applicable allowances, such as housing allowance, transportation allowance, and any other allowances.

B) Calculate the insurance deduction rate based on years of service

The insurance rate is determined based on the employee’s length of service and is calculated as a percentage of the basic salary plus housing allowance only:

• First year: 9.75%
• Second year: 10.25%
• Third year: 10.75%
• Fourth year: 11.25%
• Fifth year: 11.75%

C) Calculate the insurance deduction amount

Use this formula:

Insurance Deduction Amount = (Basic Salary + Housing Allowance) × (Insurance Rate ÷ 100)

D) Calculate the net salary

Net salary is calculated by deducting the insurance amount from the gross salary:

Net Salary = Basic Salary + Housing Allowance + Transportation Allowance − Insurance Deduction

Example

Basic salary: 5,000 SAR
Housing allowance: 1,250 SAR
Transportation allowance: 750 SAR
Years of service: 3 years
Insurance rate: 10.75%

Insurance Amount = (5,000 + 1,250) × 10.75% = 671.88 SAR

Net Salary = 5,000 + 1,250 + 750 − 671.88 = 6,328.12 SAR

When Should You Use a Salary Calculator?

Daftra’s Salary Calculator can be used in a wide range of cases that matter to both business owners and employees. It provides an accurate and flexible tool that helps you:

1. Calculate net salary after deductions: Whether you are an employee or a business owner, you can use the calculator to know the actual salary after social insurance deductions.
2. Determine salary after adding allowances: If you receive allowances such as housing, transportation, or risk allowance, the calculator helps you calculate the gross salary after adding these amounts to the basic salary.
3. Know gross salary before and after deductions: The tool helps you understand the difference between gross salary and net salary, giving you a clear view of the impact of deductions.
4. Prepare payroll accurately: The calculator can be used within Daftra’s systems to prepare payslips for each employee according to their individual financial components as stated in the employment contract.

Practical Example of Salary Calculation

Employee details:

• Basic salary: 8,000 SAR
• Housing allowance: 2,000 SAR
• Transportation allowance: 1,000 SAR
• Insurance deductions: 9.75%, as this is the employee’s first year of service.

1. Calculating Gross Salary Before Deductions

Gross Salary = 8,000 + 2,000 + 1,000 = 11,000 SAR

2. Calculating Insurance Deductions

Insurance Deduction = (Basic Salary + Housing Allowance) × 9.75 ÷ 100

Insurance Deduction = (8,000 + 2,000) × 9.75 ÷ 100 = 975 SAR

3. Calculating Net Salary

Net Salary = Basic Salary + Housing Allowance + Transportation Allowance − Insurance Deduction

Net Salary = 8,000 + 2,000 + 1,000 − 975 = 10,025 SAR

Frequently Asked Questions

How is salary calculated?

Salary is calculated by adding the basic salary to applicable allowances, such as housing and transportation allowances, then deducting social insurance or any other deductions to calculate the net salary.

Basic formula:

Net Salary = Basic Salary + Allowances − Insurance Deduction

How do you calculate 10% of salary?

To calculate 10% of any salary, multiply the salary by 10, then divide the result by 100.

Example: If the basic salary is 5,000 SAR:

10% = (5,000 × 10) ÷ 100 = 500 SAR

What are the components of salary?

Salary usually consists of the following elements:

• Basic Salary: The fixed amount agreed upon in the employment contract.
• Allowances: Such as housing allowance, transportation allowance, risk allowance, and others.
• Deductions: Such as social insurance deductions, taxes, advances, or loans.
• Other Additions, if any: Such as bonuses or overtime pay.

What is the difference between basic salary and net salary?

• Basic Salary: The fixed amount an employee receives in exchange for work, without any additions or deductions.
• Net Salary: The amount the employee actually receives after adding allowances and deducting all deductions, such as insurance and taxes. Formula: Net Salary = Basic Salary + Allowances − Deductions

What is the insurance deduction rate from salary?

The insurance deduction rate depends on the employee’s years of service and is calculated from the total of basic salary plus housing allowance only, as follows:

• First year: 9.75%
• Second year: 10.25%
• Third year: 10.75%
• Fourth year: 11.25%
• Fifth year: 11.75%

How much does insurance deduct from a 4,000 SAR salary?

To calculate the insurance deduction from a basic salary of 4,000 SAR with a housing allowance of 1,000 SAR, for example, apply the rate according to the year of service.

Example: First year at 9.75%

Deduction Amount = (4,000 + 1,000) × 9.75 ÷ 100 = 487.50 SAR

How do I calculate the deduction percentage from salary?

To calculate the deduction percentage from gross salary, use this formula:

Deduction Percentage = (Deduction Amount ÷ Gross Salary) × 100

Example: If the gross salary is 11,000 SAR and the net salary is 10,025 SAR:

Deduction = 11,000 − 10,025 = 975 SAR

Deduction Percentage = (975 ÷ 11,000) × 100 = 8.86%

Daftra’s Salary Calculator provides a practical and effective solution for both employers and employees. It simplifies payroll management and enables employees to know their net salary after deductions, calculate allowances and bonuses, and calculate deduction percentages easily.

All you need to do is enter the required details, and the tool will automatically perform the necessary calculations without effort, saving time and ensuring accurate results.