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Assume the gross salary is $150,000$ monthly & tax brackets are as follows:

  • $01 – 5,000 = 0$% Tax

  • $5,001 – 12,500= 2$% Tax

  • $12,501 – 100,000 = 10$% Tax

  • More than $100,000 = 20$% Tax

Now if we calculate tax based on tax bracket it comes to $18,900$ & net salary comes to $131,100$. Now how we can find gross salary from net Salary. Thank you

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closed as off-topic by Behaviour, Daniel Rust, Hakim, Paul, studiosus Jul 4 at 1:35

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Is it $150,000$ monthly or yearly? –  Amzoti Feb 25 '13 at 15:16

1 Answer 1

I'm assuming that you want to find the gross salary knowing only the net salary and the tax brackets.

Let's call the person whose salary we are calculating Sally. Since we know that the net salary is $131,100 \gt 100,000$, Sally must have paid the full amount of tax in the lower tax brackets between $1-100,000$, paying a total of $8900$. Thus Sally's gross income would have to be $131,000+8900+x=140000+x$, where x is the amount of tax Sally paid in the tax bracket above $100,000$. Since the tax bracket above $100,000 charges 20% tax, we have

$$20×((140000+x)-100000)=x$$

Solving, we get $x=10000$, and the gross income being $150000$.

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