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 MBA, Section 2-3, Slide 2 of 16 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 MBA, Section 2-3, Slide 3 of 16 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 MBA, Section 2-3, Slide 4 of 16 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 MBA, Section 2-3, Slide 5 of 16 2-3 How many months do you think the average person works just to pay taxes? Jack’s Jackpot p. 122

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 MBA, Section 2-3, Slide 6 of 16 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

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 MBA, Section 2-3, Slide 7 of 16 2-3 Figure 2.2

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 MBA, Section 2-3, Slide 8 of 16 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

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 MBA, Section 2-3, Slide 9 of 16 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

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 MBA, Section 2-3, Slide 10 of 16 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

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 MBA, Section 2-3, Slide 11 of 16 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

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 MBA, Section 2-3, Slide 12 of 16 2-3 $22,800 Practice 1 Answer

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 MBA, Section 2-3, Slide 13 of 16 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

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 MBA, Section 2-3, Slide 14 of 16 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.)

15. Click to edit Master text styles Second level Third level Fourth level Fifth level 15 Click to edit Master text styles Second level Third level Fourth level Fifth level 15 SECTION Copyright © Glencoe/McGraw-Hill MBA, Section 2-3, Slide 15 of 16 2-3 $71.76 Practice 2 Answer

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