Net Hourly Wage

[wayne25]

I am 65 and work (part-time) as a parking lot attendant at a rate of $9.00 per hour. My deductions are standard (Medicare, Social Security, Federal Tax and Maine State Tax).

I have noticed that the more hours I work, the less I net per hour. For example;

Hrs Worked Gross Net Rate/Hr (Net)
25.00 225.00 183.50 $7.34
15.12 136.08 115.43 $7.63
12.03 108.27 93.09 $7.74
20.70 186.30 154.72 $7.47

Now, obviously, I'm not the sharpest pencil in the box but I would really like to know what causes this sliding scale deductions from 7.64% - 18.44%. Thanks for your help.

 

[irish223]

Well actually, your deductions only vary from about 14% of your gross to about 18.5% of your gross.

12.03 108.27 93.09 $7.74

For this pay period, the deductions (about $15) equal 14% of your gross.

25.00 225.00 183.50 $7.34

For this pay period, the deductions (about $42) equal 18.5% of your gross.

My paychecks show the same sort of variance. I assume that most employers use computer software to do their payroll these days. This is what I think happens:

Your gross weekly income is entered.
The software converts your weekly income to a yearly income to determine the proper tax rate.
The tax rate for the estimated yearly income is applied to your wages.

So, when you make $225 in one week, the software extrapolates it to calculate a yearly income; that is, $225 times 52 weeks equals $11700 yearly. Likewise, when you make $108.27 weekly, your tax rate for that pay period is based on a yearly income of $5630.

When your yearly is $5630, the federal tax rate is only 10% (I think), and when your yearly is $11700, the federal tax rate is about 12% (I think). I imagine the state is similar.

Anyway, if you're concerned about the difference in deductions, ask your employer if there is some way to adjust them.