National Occupational Competency Testing Institute (NOCTI) Business Practice Exam

If a worker's gross pay is $750.00, how much is withheld for Medicare tax at a rate of 1.25 percent?

1. $9.38

2. $15.00

3. $7.50

4. $5.50

The correct answer is: $9.38

To determine how much is withheld for Medicare tax from a worker's gross pay, you multiply the gross pay by the Medicare tax rate. In this case, the worker's gross pay is $750.00, and the Medicare tax rate is 1.25 percent (or 0.0125 when converted to a decimal). The calculation proceeds as follows: 1. Convert the percentage to a decimal: 1.25 percent = 0.0125. 2. Multiply the gross pay by the tax rate: $750.00 × 0.0125 = $9.375. Rounding to the nearest cent, the amount withheld for Medicare tax is approximately $9.38. This calculation accurately reflects how to compute the withholding amount based on the gross income and the applicable tax rate, aligning with standard payroll practices.