Question

Assume your gross pay per pay period is $3,000 and you are in the 28 percent tax bracket. Calculate your net pay and spendable income if you save $300 per pay period after paying income tax on $3,000.

Answer 1

Answer and Explanation:

The computation of the net pay and the spendable income is as follows;

Net pay = Gross pay × (1 - Tax rate)

= $3,000 × (1 - 0.28)

= $2,160

And, the spendable income is

Spendable income = Net pay - Savings

= $2,160 - $300

= $1,860

Hence, it could be determined by applying the above formula

The same is to be considered