SOLUTION: Tracey Long has $100 deducted from every paycheck for retirement. She  can have this deduction taken before state taxes are applied, which reduces  her taxable income. Her state 

Algebra ->  Customizable Word Problem Solvers  -> Finance -> SOLUTION: Tracey Long has $100 deducted from every paycheck for retirement. She  can have this deduction taken before state taxes are applied, which reduces  her taxable income. Her state       Log On

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Question 1078556: Tracey Long has $100 deducted from every paycheck for retirement. She 
can have this deduction taken before state taxes are applied, which reduces 
her taxable income. Her state income tax rate is 4%. If Tracey earns $1500 
every pay period, find the difference in her net income if she has the 
retirement deduction taken before or after taxes.
Answer by Boreal(15235) About Me  (Show Source):
You can put this solution on YOUR website!
Deduction before taxes is $100, so $1400 *(0.04)=$56, and she gets $1344.
If she pays taxes before the deduction, it is $1500*(0.04)=60 and $1440 is available. That -$100 for retirement leaves her $1340. She save $4 by taking the deduction first.