Skill: Calculate net income from gross income and deductions

Net income is the money left after all deductions are taken from gross income.

$$\text{Net income}=\text{Gross income}-\text{Total deductions}$$

If a deduction is a percentage, first find that percentage of the gross income.

Example:
A paycheck shows:

• Gross income: 2{,}400.00$
• Retirement deduction: $6\%$ of gross income
• Health insurance: 85.50$
• Other deduction: 12.75$

Step 1: Find the percentage deduction.

Convert $6\%$ to a decimal and multiply:

$$0.06 \times \$2{,}400.00=\$144.00$$

The retirement deduction is 144.00$.

Step 2: Add all deductions.

$$\$144.00+\$85.50+\$12.75=\$242.25$$

The total deductions are 242.25$.

Step 3: Subtract the deductions from gross income.

$$\$2{,}400.00-\$242.25=\boxed{\$2{,}157.75}$$

The net income is 2{,}157.75$.

As a check, net income should be less than gross income. Since 2{,}157.75<$2{,}400.00$, the answer makes sense.