Take-Home Pay
The deductions taken out of
your paycheck help support
schools, roads, national
parks, and more.
Why do you think you have to
pay taxes?
Lesson Objective
Calculate net pay per pay period.
Content Vocabulary
net pay
net pay
The amount of money you have left after
your employer subtracts all tax
withholdings and personal deductions
from your gross pay, also called net
income or take-home pay.
Example 1
Alysha Moore’s gross weekly salary is $600.
She is married and claims 3 allowances. The
Social Security tax is 6.2 percent. The
Medicare tax is 1.45 percent. The state tax is
1.5 percent. Each week she pays $12.40 for
medical insurance and $2.50 for charity.
Is Moore’s earnings statement correct?
Figure 2.4
Example 1 Answer: Step 1
Find the total deductions.
a. Federal withholding
b. Social Security: 6.2% of $600.00
$27.00
37.20
c. Medicare: 1.45% of $600.00
8.70
d. State tax: 1.5% of $600.00
9.00
e. Medical insurance
f. Charity
12.40
2.50
Total $96.80
Example 1 Answer: Step 2
Find the net pay.
Gross Pay – Total Deductions
$600.00 – $104.80 = $503.20
Her statement is correct.
Practice 1
Find the deductions and the net pay. Social
Security is 6.2 percent of the first $90,000.
Medicare is 1.45 percent of all income.
Use the tax tables on pages 788-791 in your
textbook for federal tax. Round to the
nearest cent.
Practice 1 (cont.)
Pierre Lamont is married and claims 4
allowances. His gross weekly salary is $628.
Each week he pays federal, Social Security,
and Medicare taxes, as well as $28 for
medical insurance and $12 for union dues.
What are his deductions and his net pay?
Practice 1 Answer
Federal: $23
Social Security: $38.94
Medicare: $9.11
Net pay: $516.95
Practice 2
Find the deductions and the net pay. Social
Security is 6.2 percent of the first $90,000.
Medicare is 1.45 percent of all income.
Use the tax tables on pages 788-791 in your
textbook for federal tax. Round to the
nearest cent.
Practice 2 (cont.)
Michele Sawyer is single and claims 1
allowance. She earns $11.50 per hour as a
pest controller and works 40 hours per
week.
Deductions include federal income tax,
Social Security, and Medicare.
Practice 2 (cont.)
State taxes are 4 percent of gross income,
and local taxes are 2 percent of gross
income. She pays $42.75 per week for
medical insurance.
What are her deductions and net pay for the
week?
Practice 2 Answer
Federal: $46
Social Security: $28.52
Medicare: $6.67
State tax: $18.40
Local tax: $9.20
Medical insurance: $42.75
Net pay: $308.46