Taxes and Your Paystub

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What is Gross Pay?

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Gross Pay is the total amount of money earned by an employee before any deductions or taxes are taken out.

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What is Net Pay?

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Net Pay is the amount of money an employee takes home after all deductions and taxes have been subtracted from Gross Pay.

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What are Pre-Tax Deductions?

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Pre-Tax Deductions are contributions taken out of your paycheck before taxes are calculated on your income, reducing your taxable income.

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What is Discretionary Government Spending?

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Discretionary Government Spending refers to the portion of the budget that is decided by Congress through the annual appropriations process, which can vary each year.

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Which expenses are considered discretionary?

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Discretionary expenses include items like education, national parks, and foreign aid, but do not include mandatory expenses like Medicare and Medicaid.

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What is the purpose of taxes?

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Taxes are used to fund government services and programs, including infrastructure, education, and social services.

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What is a Pay Stub?

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A Pay Stub is a document provided by an employer that outlines an employee's earnings, deductions, and net pay for a specific pay period.

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What are Withholdings?

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Withholdings are amounts taken from an employee's paycheck for taxes and other deductions before the employee receives their net pay.

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What is the difference between Fixed and Variable Expenses?

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Fixed expenses remain constant each month (e.g., rent), while variable expenses can change (e.g., groceries, entertainment).

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What is the significance of Social Security and Medicare taxes?

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Social Security and Medicare taxes are mandatory payroll taxes that fund the Social Security program and Medicare health insurance for seniors.