Lesson Objective
Compute state taxes on a straight percent basis.
Most states require employers to withhold a certain
amount of pay for state income tax. Each state may
calculate this differently, but in the state of
Pennsylvania, your state income tax is calculated
using your Gross Pay and 3.07%.
Tax rates of the 50 states
Lesson 2.2 State Income (Withholding) Tax
On-The-Go
Employee
SSN
Check #
Beakens, Joe
201-92-4856
164
Check Amount
$1,102.98
Employee Address
293 Michael Grove
Billings, MT 59102
Pay TypeGross Pay
Deductions
Current
Year-to-date
$1,353.33
Federal Withholding
State Withholding
Fed OASDI/EE or Social Security
Fed MED/EE or Medicare
Medical
401K
$106.00
$40.82
$83.91
$19.62
$0.00
$0.00
$503.46
$117.72
$636.00
$244.92
$0.00
$0.00
Totals
$250.35
$1,502.10
Pay Period 6/11/2004-7/11/2004
State Income (Withholding) Tax
– The percentage deducted from an individual’s paycheck to assist in funding
government agencies within the state
– The percentage deducted depends on the amount of gross pay earned
State Calculations
State Income Tax = Taxable wages x
Tax Rate
Check stub for accuracy:
State Tax / Gross Pay = % Rate
$40.82 / $1353.33 = .03016 = 3.02%
What is PA’s State tax rate?
Example 1
• Patricia’s gross pay is $65,800 per year. She lives in PA. How
much is withheld from her gross earnings for state income tax each
month?
• $65,800 x .0307 = 2020.06 (per year)
• $2020.06 ÷ 12 = $168.34 rounded (per month)
Example 2 (on your own)
Jack earns $43,500 per year in PA. How much is withheld
from his gross earnings for state income tax each week?
43,500 x .0307 = $1335.45 (per year)
$1,335.45 ÷ 52 = $25.68 (weekly)
Closure: What is state tax money used
for?
Summarize main point: why, PA state tax rate? How is this collected?
Calculate the state withholding for Jim:
He made $1200 in gross wages last
week. What was his PA state
withholding?
Answer: 36.84
Assessment
• Gross wages 50,000 for the year. What amount of PA state tax
should be withheld?
• Answer
• 50,000 x .0307 = 1535
Homework
• Complete handout on payroll deductions and study for percentage
quiz