How to Read a Job Offer Letter: The Numbers That Actually Matter

A job offer letter is a sales document. The company wants you to say yes, so the headline number — your annual salary — gets the largest font. The details that actually determine what lands in your bank account are buried in bullet points, attachments, and vague phrases like "competitive benefits package."

This guide walks through every number worth scrutinizing, explains what moves your take-home pay, and identifies the items that sound significant but rarely are.

Start with gross salary — then immediately set it aside

Your offered salary is your gross pay. It is the ceiling, not the floor. Before you celebrate or negotiate, you need to know what the number looks like after deductions.

Here is a baseline: on a $75,000 salary paid biweekly, FICA alone — that is Social Security at 6.2% and Medicare at 1.45% — removes $215.63 per paycheck. That is $5,606 per year before a single dollar of benefits, taxes, or retirement contributions is touched. The Why Your Biweekly Paycheck Feels Smaller Than Your Salary Suggests guide covers the arithmetic in full, but the short version: divide your salary by 26, not 12, and then subtract deductions from that number.

To see two offers side by side with those deductions applied, use the Job Offer Comparison Calculator. Enter the gross pay, pay frequency, and pre-tax benefit costs for each offer and the tool shows you the estimated per-paycheck take-home for both.

The line items that actually move the needle

Health insurance premium — employee share

This is the single biggest variable most offer letters handle badly. A letter might say "medical, dental, and vision included" without telling you what you will pay per paycheck.

Always ask for the Summary of Benefits and Coverage (SBC) and the employee contribution schedule before you accept. A $72,000 offer with a $600-per-month employee premium for family coverage produces less take-home than a $68,000 offer where the employer covers the full premium. The math is not subtle: $600 per month is $7,200 per year. That wipes out the $4,000 salary difference and then some.

Health premiums paid through a Section 125 cafeteria plan are pre-tax, which reduces your FICA-taxable wages. That softens the blow slightly — on a 7.65% FICA rate, every $100 of pre-tax premium saves you $7.65 in FICA — but the premium itself still reduces take-home dollar for dollar before that savings.

401(k) match — and the vesting schedule

An employer match is real compensation. A 4% match on a $75,000 salary is $3,000 per year. Ignoring it when comparing offers is the same as ignoring a $3,000 salary difference.

The catch is vesting. "We match 100% up to 4%" sounds generous. If the vesting schedule is cliff vesting at three years, you forfeit the entire match if you leave at month 35. Read the vesting schedule in the benefits summary, not just the match percentage in the offer letter. The True Cost of Saying No to Your Employer's 401(k) Match covers the long-term math on why the match deserves this scrutiny.

Pay frequency

Offer letters almost never lead with pay frequency, but it affects your monthly cash flow. A $75,000 salary paid biweekly delivers 26 paychecks of $2,884.62 gross. The same salary paid semi-monthly delivers 24 paychecks of $3,125.00 gross. Your annual gross is identical. Your monthly budget is not, because biweekly pay produces two months each year with three paychecks instead of two.

If you are managing rent, loan payments, or any fixed monthly cost, know the pay schedule before you commit.

Signing bonus — and the clawback clause

A signing bonus looks like free money. Read the clawback language. Most signing bonuses require repayment — sometimes pro-rated, sometimes in full — if you leave within 12 to 24 months. A $10,000 signing bonus attached to an 18-month clawback is not a bonus. It is a retention mechanism.

Also account for withholding. Signing bonuses are supplemental wages. The IRS supplemental withholding rate is 22% (2026 rate, IRS Publication 15), plus FICA at 7.65%. On a $10,000 bonus, you take home approximately $7,035 — not $10,000. The gross number in the offer letter is not what hits your account.

Bonus structure — target versus guaranteed

Offer letters often include language like "eligible for an annual bonus of up to 15%." "Up to" means nothing is guaranteed. Ask directly: what was the actual payout percentage last year? What percentage of eligible employees received the full target bonus?

If the answer is vague, treat the bonus as zero when comparing base salaries across offers. If you receive it, that is upside. If you budget around it and it does not materialize, that is a problem.

The line items that are mostly noise

Free snacks, gym subsidies, and office perks. These are real benefits but they do not move your take-home pay. Do not let a ping-pong table offset a $5,000 health premium gap.

Equity at private companies. Stock options and RSUs at pre-IPO companies have uncertain value. They may be worth something. They may not. Do not include them in a take-home comparison until there is a liquidity event on a defined timeline.

"Competitive" anything. This word means nothing without a number attached to it. Ask for the number.

Running the actual comparison

Once you have the premium costs, match percentage, and pay frequency for each offer, you can model the real take-home difference. The process:

1. Calculate per-paycheck gross (annual salary divided by number of pay periods).
2. Subtract pre-tax deductions: health, dental, vision, 401(k) contribution.
3. Apply FICA: 6.2% Social Security on wages up to $176,100 (2026 wage base, SSA.gov) plus 1.45% Medicare on all wages.
4. What remains is your estimated take-home before federal and state income tax withholding.

StubTrue's FICA math is deterministic. Federal and state income tax withholding depends on your W-4 elections and state, which is why the Job Offer Comparison Calculator covers FICA and pre-tax benefit deductions rather than full income tax — mixing them in without your complete tax profile creates false precision.

Frequently asked questions

Does a higher salary always mean higher take-home pay?

Not automatically. A higher salary paired with a more expensive health plan, lower 401(k) match, or worse vesting schedule can produce lower net take-home than a nominally smaller offer with better benefits. Run the deduction math on both before deciding.

Are health insurance premiums always pre-tax?

Most employer-sponsored health premiums are deducted pre-tax through a Section 125 cafeteria plan, which reduces your FICA-taxable wages. However, not all employers offer a Section 125 plan. Ask HR whether your premiums are pre-tax or post-tax — it changes the per-paycheck math.

Can I negotiate benefits, or only salary?

Salary is usually more negotiable than published benefit tiers. Most employers have standardized health plan structures that HR cannot customize for one hire. What is often negotiable: signing bonus, title, start date, remote-work terms, and additional PTO. Knowing which items are fixed helps you direct your negotiation energy where it can actually move.

What happens to my health coverage between jobs?

If you have a gap between leaving one job and starting another, COBRA lets you continue your prior employer's coverage. The cost is typically your previous employee premium plus the employer's share plus a 2% administrative fee (DOL COBRA guidelines). That can be jarring — what felt like a $150-per-paycheck deduction may cost $600 or more per month under COBRA. Factor that into your timeline if you are weighing an immediate start date.

How do I compare an offer with equity to one without?

For publicly traded companies with a defined vesting schedule, you can model RSU value using the current share price and vesting dates — but share price is not guaranteed. For private companies, treat equity as a zero-value bonus scenario for budgeting purposes and as upside only. Base your take-home comparison on cash compensation: salary, match, and benefits.

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This guide covers FICA — Social Security and Medicare withholding — and pre-tax benefit deductions. It does not calculate federal or state income tax withholding. That is intentional: paycheck stub math and income tax withholding are different calculations, and mixing them creates false precision. Informational only — not financial or tax advice.

This guide is for informational and educational purposes only. It is not financial, tax, or legal advice. Tax rules are complex and subject to change. Consult a qualified professional before making financial decisions based on this content.

Last reviewed: July 2026 · Source: IRS Publication 15, SSA.gov.