Gross vs Net Income AND Income vs Payroll Tax

Front

What is gross income?

Back

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

Front

What is net income?

Back

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

Front

What are payroll taxes?

Back

Payroll taxes are taxes that employers withhold from employees' earnings to pay for government programs like Social Security and Medicare.

Front

What is the purpose of Medicare tax?

Back

Medicare tax helps fund the Medicare program, which provides health insurance for people aged 65 and older.

Front

What is the purpose of Social Security tax?

Back

Social Security tax helps fund the Social Security program, which provides financial assistance to retirees, disabled individuals, and survivors.

Front

How do you calculate net income?

Back

Net income is calculated by subtracting total deductions (like taxes) from gross income.

Front

If David's gross income is $127.25 and his deductions are $25.20, what is his net pay?

Back

David's net pay is $102.05.

Front

What is the difference between gross income and net income?

Back

Gross income is the total earnings before deductions, while net income is the earnings after deductions.

Front

What type of tax is withheld from an employee's paycheck for income tax?

Back

Income tax is a type of tax that is withheld from an employee's paycheck based on their earnings.

Front

If Adam earns $13 for each lawn he mows and mows 37 lawns, what is his gross income?

Back

Adam's gross income is $481.