Question

In the United States, the average single worker has a net average tax rate of 22.4
% in 2020
, compared with the Organization of Economic Cooperation and Development (OECD) average of 24.8
%. In other words, in the United States, the take-home pay of an average single worker, after tax and benefits, was 77.6
% of their gross wage, compared with the OECD average of 75.2
%.” (Google)

In this scenario, use 20
% as the payroll tax deduction.

1. How much will the monthly take-home (net) pay be?

2. Input this number on the Excel Personal Budget spreadsheet as the monthly income.

Answer 1

To calculate the monthly take-home (net) pay of an average single worker in the United States, we can follow these steps:

1. **Determine Gross Wage**: Since the specific gross wage isn't provided, let's assume a hypothetical gross monthly wage for illustration purposes. For instance, let’s consider the gross monthly wage as $5,000.

2. **Calculate Deductions**:
- **Payroll Tax Deduction**: This is a 20% deduction from the gross wage.
- **Net Income Calculation**: The net income after deductions can be calculated using the net average tax rate of 22.4% as follows:

### Step-by-Step Calculation:

1. **Calculate Payroll Tax Deduction:**
\[
\text{Payroll Tax} = \text{Gross Wage} \times 0.20
\]
\[
= 5000 \times 0.20 = 1000
\]

2. **Calculate Total Deductions:**
For simplicity, let's keep the only deduction as the payroll tax.
\[
\text{Total Deductions} = 1000
\]

3. **Calculate Take-Home Pay (Net Pay):**
\[
\text{Net Pay} = \text{Gross Wage} - \text{Total Deductions}
\]
\[
= 5000 - 1000 = 4000
\]

### Summary:

1. **Monthly Gross Wage**: $5,000
2. **Monthly Take-Home (Net) Pay**: $4,000

### Input into Excel Personal Budget Spreadsheet:

- You would input **$4,000** as the monthly income in the Excel Personal Budget spreadsheet.

### Additional Notes:

If you have a different gross wage in mind, simply replace the $5,000 with your gross wage in the calculations above to find the corresponding monthly take-home pay.