Which term refers to the amounts subtracted from gross income to yield your net income?

Which term refers to the amounts subtracted from gross income to yield your net income?

• A. Hourly
• B. Withholdings
• C. Salaried
• D. Minimum Wage

Answer: (B)

The main idea here is take-home pay versus gross pay and how deductions affect it. The amounts subtracted from gross income to yield your net income are called withholdings. These are the deductions taken from your paycheck, such as taxes, Social Security, Medicare, retirement contributions, and insurance. Gross income is what you earn before any deductions, and net income is what you receive after these deductions. The other terms describe how you’re paid (hourly or salaried) or a wage minimum, not the deductions that lead to net income.

The main idea here is take-home pay versus gross pay and how deductions affect it. The amounts subtracted from gross income to yield your net income are called withholdings. These are the deductions taken from your paycheck, such as taxes, Social Security, Medicare, retirement contributions, and insurance. Gross income is what you earn before any deductions, and net income is what you receive after these deductions. The other terms describe how you’re paid (hourly or salaried) or a wage minimum, not the deductions that lead to net income.