How to calculate monthly income from a pay stub

Gross or net

Gross pay is what the employee earned before taxes and deductions. Net pay is what reaches the bank account. Decide which one your screening criteria use, write it down, and calculate it the same way for every applicant.

Convert one paycheck to a month

The pay period printed on the stub tells you how often the employee is paid. Multiply one paycheck by the number of paychecks in a year, then divide by 12:

• Weekly (52 paychecks a year): multiply by 52, divide by 12. That's about 4.33 times one paycheck.
• Biweekly, every two weeks (26 a year): multiply by 26, divide by 12. That's about 2.17 times one paycheck.
• Semimonthly, twice a month (24 a year): multiply by 2.
• Monthly (12 a year): one paycheck is the monthly income.

Example: a biweekly gross pay of $2,000.00 is $2,000.00 × 26 ÷ 12 = $4,333.33 a month. Multiplying a biweekly paycheck by 2 is a common mistake: it leaves out two paychecks a year.

Hourly pay

For hourly pay, multiply the rate by the usual hours a week, then by 52, and divide by 12. At $22.00 an hour and 40 hours a week, that's $22.00 × 40 × 52 ÷ 12 = $3,813.33 a month.

Hours can change from one pay period to the next. Overtime is paid at a higher rate: federal law requires at least one and a half times the regular rate for a non-exempt employee's hours over 40 in a workweek. One stub with a lot of overtime can overstate a typical month, so check it against the year-to-date column.

Check it against year-to-date pay

The year-to-date gross is the total earned since January 1. Divide it by the number of months that have passed by the pay date for an average that smooths out overtime and bonuses: a stub dated at the end of June with a year-to-date gross of $24,000.00 means about $4,000.00 a month.

The monthly figure from one paycheck and the year-to-date average should be close. A big gap has ordinary explanations, like a raise, a bonus, a new job this year or unpaid leave, and it can also mean the current pay was edited. Ask the applicant about it, and compare with the paychecks on the bank statement.

Compare income with the rent

If your criteria set income as a multiple of the rent, divide the monthly income by the monthly rent. $4,333.33 a month for a $1,400 rent is 3.1 times the rent.

Count every applicant's income the same way, including income that doesn't come with a pay stub, and check the rules where your property is before setting an income requirement.