Net Income

Net Income

Net Income

The actual pay you get after deductions. This is different from gross income as gross income is the total earnings before deductions.

What are the deductions from your paycheck?

• Federal Income Tax

• State Income Tax

• Graduated State Income Tax

• Social Security and Medicare Taxes

• Group Health Insurance

Graduated State Income Tax

• This involves a different tax rate for each of several levels of income.

• As your income increases, so does the tax rate.

• The tax rate on low incomes is usually 1% to 3% while the tax rate on high incomes may be as much as 20%

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So how do we figure out the total deductions using graduated state income tax?

• Step 1: Find the taxable wages (Annual gross pay - Personal Exemptions)

• Step 2: Find the annual tax withheld. (Use state tax table)

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