Ginny Jones receives $650 gross salary biweekly. Her income tax rate is 15%. Her group health plan contribution is $24.50 per pay period. She belongs to the company retirement plan, to which she contributes 6.5% of her earnings. She is also covered under Social Security benefits. Her current contribution is 7.65%.
If these items are all her deductions, what is her take-home pay per period? $
Ginny gets a $55 raise per pay period. If her health plan is unchanged, how much of the raise will she have to take home? $
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To calculate Ginny's take-home pay per period, we need to subtract her deductions from her gross salary.
First, let's calculate the income tax deduction:
Income tax deduction = Gross salary * income tax rate
Income tax deduction = $650 * 15% = $97.50
Next, let's calculate the group health plan deduction:
Group health plan deduction = $24.50
Then, let's calculate the retirement plan deduction:
Retirement plan deduction = Gross salary * retirement plan contribution rate
Retirement plan deduction = $650 * 6.5% = $42.25
Finally, let's calculate the Social Security deduction:
Social Security deduction = Gross salary * Social Security contribution rate
Social Security deduction = $650 * 7.65% = $49.73
Now, we can calculate Ginny's take-home pay per period:
Take-home pay per period = Gross salary - (income tax deduction + group health plan deduction + retirement plan deduction + Social Security deduction)
Take-home pay per period = $650 - ($97.50 + $24.50 + $42.25 + $49.73)
Take-home pay per period = $650 - $214.98
Take-home pay per period = $435.02
Therefore, Ginny's take-home pay per period is $435.02.
Now, let's calculate how much of the $55 raise Ginny will take home. Since her health plan is unchanged, the only deduction that will increase is the income tax deduction.
The new income tax deduction with the raise can be calculated as follows:
New income tax deduction = (Gross salary + raise) * income tax rate
New income tax deduction = ($650 + $55) * 15% = $97.50 + $8.25 = $105.75
To find out how much of the raise Ginny will take home, we subtract the new income tax deduction from the raise amount:
Amount of raise taken home = Raise - New income tax deduction
Amount of raise taken home = $55 - $105.75
Amount of raise taken home = -$50.75
In this case, the income tax deduction exceeds the raise amount, so Ginny will actually have a decrease in take-home pay by $50.75.
Therefore, Ginny will not be able to take home any of the $55 raise; instead, her take-home pay will decrease by $50.75.