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Thread: Basic question with fractions

  1. #1
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    Red face Basic question with fractions

    Here is the question:

    If the tax rate is 25% and net income is $100,000, what is gross income?
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  2. #2
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    Re: Basic question with fractions

    If the tax rate is 25% then the tax on gross income, G, is 0.25G. The net income, N, is the gross income minus that tax: N= G- 0.25G= (1- 0.25)G= 0.75G.
    So to go from gross income to net income, you multiply by 0.75.

    To go the other way, from net income to gross income, do the opposite- divide by 0.75.
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  3. #3
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    Re: Basic question with fractions

    Quote Originally Posted by thudson View Post
    If the tax rate is 25% and net income is $100,000, what is gross income?
    25% of gross income has been deducted, leaving $100,000 net.
    What is gross income?
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