state income tax
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SECTION. 2-2. pp.119-121. State Income Tax. Section Objective. Compute: state taxes on a straight percent basis. Key Words to Know. personal exemptions (p. 119) The number of people an employee supports, on which taxes are based, also called withholding allowances. Formula 1. - PowerPoint PPT PresentationTRANSCRIPT
State Income Tax pp.119-1212-2SECTIONSECTION
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Section ObjectiveSection ObjectiveCompute:
• state taxes on a straight percent basis
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personal exemptions (p. 119)
The number of people an employee supports, on which taxes are based, also called withholding allowances.
Key Words to KnowKey Words to Know
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How do I calculate taxable wages?
Taxable Wages = Annual Gross Pay – Personal Exemptions
Formula 1Formula 1
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How do I calculate annual taxes withheld?
Annual Tax Withheld = Taxable Wages × Tax Rate
Formula 2Formula 2
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Jack’s Jackpot p. 119Jack’s Jackpot p. 119
Why do most states charge taxes?
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Patricia Line’s gross pay is $65,800 a year. The state income tax rate is 3 percent of taxable wages.
Line takes a married exemption for herself and her husband. Use the Personal Exemptions table on the next slide to find out how much is withheld from her gross earnings for state income tax within the year.
Example 1Example 1
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Personal Exemptions
Single: $1,500
Married: 3,000
Each Dependent: 700
Example 1 (cont.)Example 1 (cont.)
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Find the taxable wages.
Annual Gross Pay – Personal Exemptions
$65,800.00 – $3,000.00 = $62,800.00
Example 1 Answer: Example 1 Answer: Step 1Step 1
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Find the annual tax withheld.
Taxable Wages × Tax Rate
$62,800.00 × 3% = $1,884.00
Example 1 Answer: Example 1 Answer: Step 2Step 2
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Use the Personal Exemptions table in Example 1 above to find the amount withheld.
Tomoko Nakazawa.Earns $38,657 annually.Married, no dependents.What are her personal exemptions?
Practice 1Practice 1
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$3,000
Practice 1 AnswerPractice 1 Answer
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Paul Chamello earns $168,000. He is single. His personal exemptions include himself and his five children. The state tax rate is 2.5 percent of taxable income.
What amount is withheld yearly for state income tax?
Practice 2Practice 2
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$4,075
Practice 2 AnswerPractice 2 Answer
State Income Tax2-2END OF SECTIONEND OF SECTION