Tax and Income Flashcard

Front

What is a graduated tax?

Back

A tax system where the tax rate increases as the taxable amount increases, meaning higher income earners pay a higher percentage of their income in taxes.

Front

What is a flat tax?

Back

A tax system with a constant tax rate, regardless of the amount of income earned.

Front

What are withholdings?

Back

Amounts taken out of an employee's paycheck for taxes and other deductions before the employee receives their net pay.

Front

What are deductions?

Back

Expenses that can be subtracted from gross income to reduce the amount of income that is subject to tax.

Front

What is the Social Security tax rate?

Back

A federal tax rate of 6.2% on earnings, used to fund the Social Security program.

Front

How do you convert a percentage to a decimal?

Back

Divide the percentage by 100. For example, 6.2% becomes 0.062.

Front

What is net pay?

Back

The amount of money an employee takes home after all deductions and taxes have been subtracted from their gross pay.

Front

How many paychecks do you receive in a year if paid bi-weekly?

Back

26 paychecks.

Front

What is gross pay?

Back

The total amount of money earned by an employee before any deductions or taxes are taken out.

Front

Do all states collect income taxes?

Back

No, some states do not collect income taxes.