Chin needs more money in his net pay each month so he plans to reduce his federal income tax deduction from 12% to 11%. His monthly gross pay is $3,500, and his deductions before the change are listed in the table.
Deduction
Dollar Amount
Federal Income Tax
$420
State Income Tax
$95
Social Security
$89
Medicare
$40
What will be his new monthly net pay? Round your answer to the nearest dollar. A.$2821 B.$2857C.$2860D.$2891
The correct answer is D. $2891. That is calculated by having the following: Chin's gross pay minus the deductions. However, the Federal Income tax will only be $385 instead of $420 since we are reducing her tax from 12% to 11%. So, $3500 - (385+95+89+40) = $2891.
