The net pay of Luis will increase by $22.61 due to the decrease in the federal withholding allowances from 2 to 3.
<h3>Computation of net pay based upon the different levels of federal withholdings</h3>
Given,
Gross pay =$770
2 Federal withholding allowances =$50(taken from the reference table)
3 Federal withholding allowances =$31(taken from the reference table)
Federal state tax rate =19%
First, the state tax rate and the total amount of withholding for 2 Federal withholding allowances are computed:
Now, the state tax rate and the total amount of withholding for 3 Federal withholding allowances are computed:
The difference in the net pay will be the difference between $59.50 and $36.89, which is $22.61.
Therefore, Luis withholding will decrease from $59.50 to $36.89 that is increasing the net pay by $22.61
To know more about federal-state tax, refer to the link:
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