Understanding Pay and Taxes

What is Net Pay?

• An employee's earnings after all deductions are taken out.

• An individual's total earnings before any deductions are made.

• The amount of money you pay for goods or income.

• A tax rate that increases as taxable income increases.

What is Gross Pay?

• An employee's earnings after all deductions are taken out.

• An individual's total earnings throughout a given period before any deductions are made.

• The amount of money you pay for goods or income.

• A tax rate that increases as taxable income increases.

What is a Below the line deduction?

• Deductions from your gross income to calculate your adjusted gross income.

• Everyday expenses like business mileage, rent, and office supplies.

• A dollar amount that non-itemizers may subtract from their income before income tax is applied.

• The amount of money you pay for goods or income.

What is the Standard Deduction?

• A dollar amount that non-itemizers may subtract from their income before income tax is applied.

• Deductions from your gross income to calculate your adjusted gross income.

• Everyday expenses like business mileage, rent, and office supplies.

• The amount of money you pay for goods or income.

What is an Itemized Deduction?

• A dollar amount that non-itemizers may subtract from their income before income tax is applied.

• Deductions from your gross income to calculate your adjusted gross income.

• Below the line deduction where you add up everyday expenses you have been saving throughout the year.

• The amount of money you pay for goods or income.

What is a Progressive Tax?

• A tax rate that increases as taxable income increases.

• A tax rate that decreases as taxable income increases.

• All taxpayers are required to pay the same percentage of their income in taxes.

• The percentage of tax you owe on your taxable income.

What is a Regressive Tax?

• A tax rate that increases as taxable income increases.

• A tax rate that decreases as taxable income increases.

• All taxpayers are required to pay the same percentage of their income in taxes.

• The percentage of tax you owe on your taxable income.

What is a Proportional Tax?

• A tax rate that increases as taxable income increases.

• A tax rate that decreases as taxable income increases.

• All taxpayers are required to pay the same percentage of their income in taxes.

• The percentage of tax you owe on your taxable income.

How is the Effective Tax Rate calculated?

• By dividing your total paid tax by your taxable income.

• By adding all your deductions.

• By subtracting your deductions from your gross income.

• By multiplying your gross income by the tax rate.

What is the Marginal Tax Rate?

• The percentage of tax you owe on your taxable income.

• The amount of additional tax paid for every additional dollar earned as income.

• The total tax paid divided by your taxable income.

• The same percentage of income paid by all taxpayers.