Net income is the amount remaining from gross earnings after all listed deductions are subtracted: net income = gross income − (sum of deductions). The understanding includes combining fixed-dollar deductions and straightforward deductions expressed as a percentage of gross income, interpreting pay-statement amounts, preserving dollar-and-cent precision, and checking that net income is less than gross income; advanced withholding, tax-bracket, and compound payroll calculations are excluded.
Net income is the money left after all deductions are taken from gross income.
If a deduction is a percentage, first find that percentage of the gross income.
Example:
A paycheck shows:
Step 1: Find the percentage deduction.
Convert to a decimal and multiply:
The retirement deduction is 144.00$.
Step 2: Add all deductions.
The total deductions are 242.25$.
Step 3: Subtract the deductions from gross income.
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.
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