1. Graduated State Income Tax pp. 122-123 2-3 SECTION

2. Click to edit Master text styles Second level Third level Fourth level Fifth level 2 Click to edit Master text styles Second level Third level Fourth level Fifth level 2 SECTION Copyright © Glencoe/McGraw-Hill 2-3 Section Objective Determine: state taxes on a graduated income basis

3. Click to edit Master text styles Second level Third level Fourth level Fifth level 3 Click to edit Master text styles Second level Third level Fourth level Fifth level 3 SECTION Copyright © Glencoe/McGraw-Hill 2-3 graduated income tax (p. 122) An income tax in which the tax rate increases at different levels of income. Key Words to Know

4. Click to edit Master text styles Second level Third level Fourth level Fifth level 4 Click to edit Master text styles Second level Third level Fourth level Fifth level 4 SECTION Copyright © Glencoe/McGraw-Hill 2-3 Tax Withheld per Pay Period = Annual Tax Withheld Number of Pay Periods per Year Formula

5. Click to edit Master text styles Second level Third level Fourth level Fifth level 5 Click to edit Master text styles Second level Third level Fourth level Fifth level 5 SECTION Copyright © Glencoe/McGraw-Hill 2-3 Louise Maffeo’s annual salary is $34,500. She is paid semi-monthly. Her personal exemptions total $1,500. How much does her employer deduct from each of Maffeo’s semi-monthly paychecks for state income tax? Example 1

6. Click to edit Master text styles Second level Third level Fourth level Fifth level 6 Click to edit Master text styles Second level Third level Fourth level Fifth level 6 SECTION Copyright © Glencoe/McGraw-Hill 2-3 Figure 2.2

7. Click to edit Master text styles Second level Third level Fourth level Fifth level 7 Click to edit Master text styles Second level Third level Fourth level Fifth level 7 SECTION Copyright © Glencoe/McGraw-Hill 2-3 Find the taxable wages. Annual Gross Pay – Personal Exemptions $34,500.00 – $1,500.00 = $33,000.00 Example 1 Answer: Step 1

8. Click to edit Master text styles Second level Third level Fourth level Fifth level 8 Click to edit Master text styles Second level Third level Fourth level Fifth level 8 SECTION Copyright © Glencoe/McGraw-Hill 2-3 Find the annual tax withheld. 1. 1.First $1,000: 1.5% of $ 1,000.00 = $ 15.00 2. 2.Next $2,000: 3.0% of $ 2,000.00 = 60.00 3. 3.Next $2,000: 4.5% of $ 2,000.00 = 90.00 4. 4.Over $5,000: 5.0% of ($33,000.00 – $5,000.00) 5.0% of $28,000.00 = 1,400.00 Total $1,565.00 Example 1 Answer: Step 2

9. Click to edit Master text styles Second level Third level Fourth level Fifth level 9 Click to edit Master text styles Second level Third level Fourth level Fifth level 9 SECTION Copyright © Glencoe/McGraw-Hill 2-3 Find the tax withheld per pay period. Annual Tax Withheld ÷ Number of Pay Periods per Year $1,565.00 ÷ 24 = $65.208 or $65.21 Example 1 Answer: Step 3

10. Click to edit Master text styles Second level Third level Fourth level Fifth level 10 Click to edit Master text styles Second level Third level Fourth level Fifth level 10 SECTION Copyright © Glencoe/McGraw-Hill 2-3 Patricia Hanson. Annual gross pay of $24,300. Personal exemption of $1,500. 2 percent state tax on first $5,000. 3 percent state tax on amount over $5,000. What is her taxable income? Practice 1

11. Click to edit Master text styles Second level Third level Fourth level Fifth level 11 Click to edit Master text styles Second level Third level Fourth level Fifth level 11 SECTION Copyright © Glencoe/McGraw-Hill 2-3 $22,800 Practice 1 Answer

12. Click to edit Master text styles Second level Third level Fourth level Fifth level 12 Click to edit Master text styles Second level Third level Fourth level Fifth level 12 SECTION Copyright © Glencoe/McGraw-Hill 2-3 Use the following tax table to find the amount of state tax withheld. First $3,5003% Next $3,5004.5% Over $7,0007% Practice 2

13. Click to edit Master text styles Second level Third level Fourth level Fifth level 13 Click to edit Master text styles Second level Third level Fourth level Fifth level 13 SECTION Copyright © Glencoe/McGraw-Hill 2-3 Caroline Pollack’s gross pay is $31,452. She has personal exemptions of $3,600.. How much is withheld from her semimonthly paycheck for state income tax? Round to the nearest cent. Practice 2 (cont.)

14. Click to edit Master text styles Second level Third level Fourth level Fifth level 14 Click to edit Master text styles Second level Third level Fourth level Fifth level 14 SECTION Copyright © Glencoe/McGraw-Hill 2-3 $71.76 Practice 2 Answer

15. Graduated State Income Tax 2-3 END OF SECTION