Ages 10+ · Money · Money and the world
Income tax: what comes off
Ana's week at the bakery 0 10 20 30 40 50 50 Pay before tax 10 Tax 40 Take-home coins Ana's week: 50 coins before tax, 10 coins of tax, 40 coins to take home. The big idea Income tax is a share of pay that comes off first. What is left is take-home.
How it works Income tax is a share of pay that comes off first. What is left is take-home pay.
In the made-up town of Brookfield, 2 coins out of every 10 go to the town pot.
The baker sends the tax to the pot before the envelope is filled, so the tax never reaches the worker.
The pot pays for things everyone uses, like the bridge, the school and the lamps on Main Street.
Ana earns 50 coins 2 in every 10 go to the pot 40 coins reach the envelope From gross pay to take-home pay. 🌉 the bridge 🏫 the school 💡 the lamps
What the pot pays for. Gross pay • The pay before tax • Ana's was 50 coins Take-home pay • What is left after tax • Ana's was 40 coins Pay before tax and pay after tax. Example 1: Ana's tax Ana earns 50 coins, which is 5 groups of ten. Two coins from each group go to the pot: 5 × 2 = 10. Her take-home pay is 50 − 10 = 40. Example 2: Leo's tax Leo earns 30 coins, which is 3 groups of ten. 3 × 2 = 6 coins of tax. Leo keeps 30 − 6 = 24 coins. Example 3: Ana's raise Ana's pay rises to 60 coins, which is 6 groups of ten. 6 × 2 = 12 coins of tax. Her take-home pay is 60 − 12 = 48. Before the raise it was 40, and 48 − 40 = 8, so she keeps 8 more coins. Ana's take-home pay 0 10 20 30 40 50 40 Before 48 After coins Take-home pay before and after the raise. Example 4: Same share, more coins Ana pays 10 coins and Leo pays 6. Both pay 2 coins in every ten. Ana earns more, so the same share is more coins. Words to know gross pay The pay before tax comes off. income tax A share of pay that comes off first. take-home pay What is left after the tax. the pot Where the tax goes, to pay for things everyone uses. Watch out Gross pay is the pay before tax. Take-home pay is the pay after tax. Plan with take-home pay, because those are the coins that really arrive. A raise still leaves more take-home pay. Ana's went up by 8 coins, not down. Two in every ten is only Brookfield's made-up rule. Real taxes differ by place, and a grown-up knows the ones near you. Try it Kit earns 40 coins, and 2 coins in every 10 go to the pot. How many coins is the tax? Ana's gross pay is 50 coins and her tax is 10 coins. What is her take-home pay? Should Ana plan her week with her gross pay or her take-home pay? Answers: 1. 8 · 2. 40 coins · 3. Her take-home pay
Try at home Ask a grown-up what the words gross pay and take-home pay mean on a pay slip. You do not need to see any numbers.
For grown-ups This is a made-up town with a made-up rule. If your child is curious, look together at the words gross and take-home on a real pay slip, with no need to read out any private numbers. Real tax rules differ by place.