Question

An employee earns a gross pay of $1,200.00 per week. The employee's net pay is $850.00. The employee's voluntary 401(k) contribution is $50.00 per month.

Answer 1

Answer:

$300 was deducted from tax. The tax rate is 26.1%

Step-by-step explanation:

An employee earns a gross pay of $1,200.00 per week. The employee’s net pay is $850.00. The employee’s voluntary 401(k) contribution is $50.00 per month.

There was blank deducted for taxes. The tax rate is blank

Solution:

Contributions that are made for retirement such as 401(k) contribution plans are made on a pretax basis. This means that they are removed from your taxable income, thereby reducing the tax.

Gross pay = $1200

Taxable income = Gross pay -  401(k) contribution

Taxable income = $1200 - $50 = $1150

Net pay = $850

Tax = Taxable income - Net pay

Tax = $1150 - $850

Tax = $300

Tax rate = (Tax / taxable income) * 100%

Tax rate = ($300 / $1150) * 100% = 26.1%