An employee earns $2,000 gross monthly. Deductions include health insurance $104.36, 9% federal tax, 3% state tax, and 2% local tax. What is the net pay?

An employee earns $2,000 gross monthly. Deductions include health insurance $104.36, 9% federal tax, 3% state tax, and 2% local tax. What is the net pay?

• A. $1,615.64
• B. $1,384.64
• C. $1,800.50
• D. $1,520.42

Answer: (A)

Net pay is what remains after all deductions are taken from gross pay. Here, the gross monthly pay is $2,000. The deductions are health insurance $104.36, plus 9% federal tax, 3% state tax, and 2% local tax, all based on the gross amount. Calculate the percentages: 9% of 2,000 is 180; 3% of 2,000 is 60; 2% of 2,000 is 40. Add these: 180 + 60 + 40 = 280. Add the fixed health insurance: 280 + 104.36 = 384.36 total deductions. Subtract from gross pay: 2,000 − 384.36 = 1,615.64. Net pay = $1,615.64.

Net pay is what remains after all deductions are taken from gross pay. Here, the gross monthly pay is $2,000. The deductions are health insurance $104.36, plus 9% federal tax, 3% state tax, and 2% local tax, all based on the gross amount.

Calculate the percentages: 9% of 2,000 is 180; 3% of 2,000 is 60; 2% of 2,000 is 40. Add these: 180 + 60 + 40 = 280. Add the fixed health insurance: 280 + 104.36 = 384.36 total deductions. Subtract from gross pay: 2,000 − 384.36 = 1,615.64.

Net pay = $1,615.64.