1. The truth about your paycheck Gross vs Net Pay
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2. Gross vs. Net Pay DEDUCTIONS TAXES GROSS PAY
Gross = actual earnings – What you Earn
Net = actual paycheck or direct deposit – What you Get
NET PAY

3. Taxes Withheld Federal State 3.07% Local 1% Taken once each year
Income tax 10 or 15% (details)
Social Security 6.2% (up to $7,886.40)
Maxes out when earning read $127,200 in 2017
Medicare 1.45%
State 3.07%
Local 1%
Taken once each year
County taxes
Emergency taxes

4. State withholding varies
Source:

5. Pre-tax deductions
No federal and sometimes no state taxes are paid for the contribution amount
Flexible spending accounts
Pay for medical expenses or childcare
Use it or lose it
Health Insurance Contributions
Savings Plans
401(k) Retirement savings - 403(b) for non-profits
529 account for education

6. Free Money Matching Funds
Some employers match employee contributions to 401(k) retirement savings accounts.
Example: You allocate 5% of your pay to go into your 401(k). For a $600 paycheck, that is $600 x .05 = $30. Your employer will match that $30 giving you a 100% immediate return on your investment.

7. Other deductions Charitable contributions Union Dues
Unemployment insurance .06% (up to $500)
Disability insurance (not in PA)
Life insurance
Purchase vacation time
Some employers let you spread the cost of unpaid days off over the year
Charitable contributions

8. How do you figure it? You work 30 hours at $7.25/hour.
You earn: $217.50
Subtract
Federal tax: $ x 15% =
Social Sec: $ x 6.2% =
Medicare: $ x 1.45% =
State tax: $ x 3.07% =
Local taxes: $ x 1% =

9. How do you figure it? You work 40 hours at $15/hour. You earn: $600
Subtract
Federal tax: $600 x 15% =
Social Sec: $600 x 6.2% =
Medicare: $600 x 1.45% =
State tax: $600 x 3.07% =
Local taxes: $600 x 1% =

10. Sample Paystub

11. Deductions
Earnings $
Savings $20/week
Health Insurance $50/week
So, starting with $600 a week, your actual take home, or net pay, after taxes but before savings, is $ That’s 62%.

12. Playing with the Numbers
Using Excel, we’re going to experiment with numbers and see how formulas can do the work for you.

13. Assignment
Complete assignment 3.1 Paycheck Quick Review in Moodle, Unit 3.

14. The truth about your paycheck Gross vs Net Pay
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