Question

Sam Kramer earns an annual salary of $38,900. He is paid semimonthly. His personal exemptions total $4826. The state income tax on taxable wages is 2% of the first $1000, 3% on the next $3000, 3. 5% on the nest $3000, and 4% on the amount over $7000. How much is deducted from Sam’s salary each pay period for state income tax?

Answer 1

Explanation:

we pay taxes of the income without the exemptions.

so, the tax-interresting amount is

38,900 - 4826 = $34,074

2% of the first $1000 = $20

$34,074 - 1000 = $33,074

3% of the next $3000 = $90

$33,074 - 3000 = $30,074

3.5% of the next $3000 = $105

$30,074 - 3000 = $27,074

4% of $27,074 = $1,082.96

so, in total he pays state taxes over a year

20+90+105+1082.96 = $1,297.96

now, he gets paid semimonthly, that means twice a month.

his salary but also his deductions (incl. tax deductions) are all split across these 24 paychecks per year.

so, each state income tax deduction is then

$1,297.96 / 24 = $54.08 on every paycheck.