Question

Raul is moving from Houston, Texas to Los Angeles, California for his new job. In Houston, he makes $70,000 per year but does not have to pay state income tax. His new job in L.A. pays $110,000 per year but he has to pay a 10% state tax on his salary. By what percent does his salary actually increase? Round your answer to the nearest tenth of a percent (one decimal place).

Answer 1

Given:

Raul's salary

Houston $ 70,000

Los Angeles $ 110,000 ( w 10% state tax)

Requird: actual % salary increase

Solution

Cost of the state tax = 10% ( $110,000) = (0.10) (110000) = $ 11, 000

The state tax will be deducted from his salary in Los Angeles, leaving him with only

$ 110,000 - $11, 000 = $ 99,000

Actual increase in salary = $ 99,000 - $ 70,000 = $ 29,000

% salary increase = ( actual salary increase/ salary in houston)*100 = ( $ 29,000 / $ 70, 000 )*100= 41.4%