How to Calculate Your Bi-Monthly Pay

Understanding how your salary is disbursed is an important aspect of personal financial management. Employees often encounter various pay frequencies, which can sometimes lead to confusion regarding the exact amount they will receive. Comprehending the specifics of your pay cycle helps in budgeting and financial planning.

Defining Bi-Monthly Pay

Bi-monthly pay refers to a compensation schedule where employees receive their wages twice within a single month. This typically translates to 24 paychecks over the course of a year. Common payment dates for a bi-monthly schedule might include the 1st and the 15th of each month, or alternatively, the 15th and the last day of the month.

This pay frequency is often confused with “bi-weekly” pay, which involves receiving compensation every two weeks, resulting in 26 paychecks annually. While “bi-monthly” means twice a month, “semi-monthly” is a synonymous term used to describe the identical pay frequency.

Steps to Calculate Gross Pay

Calculating your gross bi-monthly pay involves a straightforward process, differing slightly based on whether you are a salaried or hourly employee. Gross pay represents your total earnings before any deductions are subtracted.

For salaried employees, the calculation begins with the annual salary. To determine the gross bi-monthly pay, divide the total annual salary by 24, as there are 24 bi-monthly pay periods in a year. For example, an employee with an annual salary of $60,000 would receive a gross bi-monthly payment of $2,500 ($60,000 / 24).

Hourly employees calculate their gross bi-monthly pay by multiplying the total hours worked within the bi-monthly period by their hourly rate. If an hourly employee works 80 hours in a bi-monthly period at $20 per hour, their gross pay for that period would be $1,600 (80 hours x $20/hour). This amount will fluctuate with the actual hours recorded for each specific pay cycle.

Understanding Withholding and Net Pay

The gross pay you calculate is not the final amount you receive in your bank account; various withholdings and deductions are subtracted to arrive at your net, or take-home, pay. These subtractions are either legally mandated or voluntarily elected by the employee. Employers are responsible for withholding these amounts and remitting them to the appropriate entities.

Mandatory withholdings include federal income tax, state income tax (if applicable), and FICA taxes. FICA, or the Federal Insurance Contributions Act, funds Social Security and Medicare programs. For 2025, employees contribute 6.2% of their wages to Social Security, up to an annual wage base limit of $176,100, and 1.45% for Medicare, with no wage limit. An additional Medicare tax of 0.9% applies to higher earners exceeding certain income thresholds.

The amount of federal income tax withheld is determined by the information provided on your IRS Form W-4, Employee’s Withholding Certificate. This form allows employees to indicate their tax situation, helping employers withhold the correct amount of federal income tax from each paycheck.

Beyond mandatory taxes, other deductions may reduce your gross bi-monthly pay. These can include voluntary contributions such as health insurance premiums, contributions to retirement plans like a 401(k), or flexible spending accounts. Other involuntary deductions, such as wage garnishments for child support or other legal obligations, can also be subtracted from gross pay. After all these deductions are applied, the remaining amount is your net pay, which is the actual sum deposited into your account.