Financial Literacy: Reading a Pay Stub: Gross, Net, and Deductions
Understanding earnings, taxes, deductions, and take-home pay
Financial Literacy: Reading a Pay Stub: Gross, Net, and Deductions
Understanding earnings, taxes, deductions, and take-home pay
Financial Literacy - Grade 9-12
- 1
A pay stub lists regular hours as 40, hourly rate as $16.50, and overtime hours as 0. What is the employee's gross pay for this pay period?
Gross pay is the amount earned before taxes and deductions are taken out.
The gross pay is $660.00 because 40 hours multiplied by $16.50 per hour equals $660.00. - 2
A student works 32 hours at $14.25 per hour. The pay stub shows $62.70 in total deductions. What is the student's net pay?
The gross pay is $456.00 because 32 multiplied by $14.25 equals $456.00. The net pay is $393.30 because $456.00 minus $62.70 equals $393.30. - 3
Look at this sample pay stub: Gross Pay $920.00, Federal Tax $92.00, State Tax $36.80, Social Security $57.04, Medicare $13.34, Retirement $46.00. What is the total amount deducted from the paycheck?
Add every amount that is taken out of the paycheck.
The total deductions are $245.18 because $92.00 + $36.80 + $57.04 + $13.34 + $46.00 = $245.18. - 4
Using the same sample pay stub from problem 3, what is the net pay?
The net pay is $674.82 because the gross pay of $920.00 minus total deductions of $245.18 equals $674.82. - 5
A pay stub shows gross pay of $1,250.00 and net pay of $982.40. How much money was taken out for deductions?
Deductions are the difference between gross pay and net pay.
The total deductions were $267.60 because $1,250.00 minus $982.40 equals $267.60. - 6
A pay stub lists these deductions: Federal Tax $118.50, State Tax $42.25, Social Security $73.47, Medicare $17.18, Health Insurance $65.00. Which deduction is the largest, and how much is it?
The largest deduction is Federal Tax, which is $118.50. - 7
A worker earns $18.00 per hour for 40 regular hours and $27.00 per hour for 5 overtime hours. What is the worker's gross pay?
Calculate regular pay and overtime pay separately, then add them.
The worker's gross pay is $855.00 because regular pay is 40 multiplied by $18.00, or $720.00, and overtime pay is 5 multiplied by $27.00, or $135.00. The total is $720.00 + $135.00 = $855.00. - 8
A pay stub shows that Social Security tax is $49.60. If Social Security is 6.2% of gross pay, what was the gross pay?
To find the whole amount when you know a percent of it, divide by the decimal form of the percent.
The gross pay was $800.00 because $49.60 divided by 0.062 equals $800.00. - 9
A pay stub shows current gross pay of $740.00 and year-to-date gross pay of $8,880.00. What does year-to-date gross pay mean in this situation?
Year-to-date gross pay means the employee has earned $8,880.00 before taxes and deductions so far during the year, including the current paycheck. - 10
Examine this pay stub summary: Current Gross Pay $1,100.00, Current Net Pay $825.00, Year-to-Date Gross Pay $14,300.00, Year-to-Date Net Pay $10,725.00. How much has been deducted year-to-date?
Use the year-to-date amounts, not the current paycheck amounts.
The year-to-date deductions are $3,575.00 because $14,300.00 minus $10,725.00 equals $3,575.00. - 11
A pay stub shows gross pay of $680.00. Deductions are Federal Tax $68.00, State Tax $20.40, Social Security $42.16, Medicare $9.86, and Parking Fee $15.00. What is the net pay?
The total deductions are $155.42 because $68.00 + $20.40 + $42.16 + $9.86 + $15.00 = $155.42. The net pay is $524.58 because $680.00 minus $155.42 equals $524.58. - 12
A teenager gets a job offer for $15.00 per hour and expects to work 20 hours per week. They estimate their weekly gross pay as $300.00. Explain why their take-home pay will likely be less than $300.00.
Think about the difference between gross pay and net pay.
Their take-home pay will likely be less than $300.00 because taxes and other deductions may be subtracted from gross pay. Net pay is the amount actually received after deductions.