Module 9

Taxes & Income

Everyone tells you that saving is critical for the future and that investing is a way to build true wealth, but what about investing in yourself?

Education is an asset because it helps increase your potential earnings throughout your life-time! This module explores how we can finance things like college to make them more accessible and elevate your future career earnings!

Module At A Glance

Grade Levels:

9th -12th

Est. Length:

2-4 Hours (21 slides)

Activities:

5 Activities

Articles:

8 Articles

Languages:

English & Spanish

Curriculum Fit:

Math, Business, Economics, CTE, Social Studies

Standards Alignment:

CEE National Standards, Jump$tart National Standards & Relevant State Standards

Guiding Questions

What happens when I get my first job and receive my first paycheck?
Are there different types of income and do they have different tax rates?
What are different ways to lower my taxable income?
What happens if I don’t pay my taxes?
How does the economy impact your career & ability to switch jobs?
What is opportunity cost and how can it impact the way you make decisions?
Is college worth the investment to earn more?

Enduring Understandings

Taxes are an inescapable part of earning income, and it’s important to pay them or else you can face fines and considerable jail time.
Capital gains taxes are considerably lower than income taxes.
Avoiding taxes is illegal and you can go to jail for tax evasion if you do not pay up!
Investing in yourself by developing new skills and obtaining higher education pays off.
Sometimes switching jobs can be the best choice for your career.
Donating to charity is just one way you can lower your taxable income.

Module Vocab & Key Topics

Investing: The act of allocating money or capital to an asset or endeavor with the expectation of generating a return on investment (ROI). Investing aims for long-term wealth accumulation.
Savings: Money set aside for future use, often stored in a low-risk, easily accessible account like a savings account. Unlike investing, savings don't typically generate significant returns.
Income Tax: Taxes levied by the government on the money earned by individuals or businesses. Income tax is a primary source of revenue for the government.
Capital Gains Tax: Taxes on the profit made from selling an asset like stocks, real estate, or other investments. Capital gains tax rates are usually lower than income tax rates.
Gross Income: The total amount of money someone earns before any taxes or deductions are applied. It includes wages, bonuses, dividends, and other sources of income.
Net Income: The amount of money left after all taxes and expenses have been deducted from gross income. Net income reflects the true earnings that can be spent or saved.
Tax Evasion: The illegal act of deliberately not paying taxes owed to the government. Tax evasion can result in hefty fines and imprisonment.
Tax Basis: The initial value of an asset for tax purposes, usually the purchase price, which is used to calculate capital gains or losses.
Realized Gains: Profits from investments that have been sold. Realized gains are subject to capital gains tax.
Unrealized Gains: Potential profits from investments that are still owned. Unrealized gains are not taxed until the asset is sold.
Payroll Deductions: Amounts subtracted from an employee's paycheck for various reasons, including taxes, insurance, and retirement contributions. Understanding payroll deductions helps in budgeting.
Charitable Donation: Giving money, goods, or time to a non-profit organization. Charitable donations may be tax-deductible, reducing one's taxable income.

Worked Examples

Taxes In Action

Four steps between what you earn and what actually lands in your account.

Figures current · August 2026

Gross to net

Your Paycheck Has Layers

net = gross − fed − FICA − stateFICA = 7.65%

Take a single filer earning $60,000 a year. Before any money reaches the bank, three separate lines come out: about $5,020 in federal income tax (after the standard deduction), a flat 7.65% for FICA ($4,590), and — illustratively — a 4% state income tax ($2,400).

$47,990take-home on $60,000about 80% of gross

$60,000$5,020 federal$4,590 FICA$2,400 state$47,990 take-home

Take-home pay is what's left after several separate withholdings stack up, not a single tax line.

Standard deduction

Income the Tax Skips

taxable = gross − deduction2026 single: $16,100

That same $60,000 is not all taxable. In 2026 a single filer subtracts a $16,100 standard deduction first — no receipts, no itemizing. Only the $43,900 left underneath it ever meets a tax rate.

$43,900taxable income$16,100 never taxed

$60,000$16,100 deducted$43,900 taxable

The standard deduction erases a fixed first slice of income, so no tax rate ever touches it.

FICA split

Who Pays Payroll Tax

total = 6.2% + 1.45%, matched by the employeryou pay 7.65%

FICA is two taxes: 6.2% for Social Security and 1.45% for Medicare, 7.65% in all. On $60,000 that is $4,590 withheld from you — and your employer quietly pays an identical $4,590 match on top, for $9,180 in total.

$9,180total FICA on $60,000your half: $4,590

You pay$3,720 Soc. Sec.$870 Medicare

Employer$3,720 Soc. Sec.$870 Medicare

The payroll line on your stub is only half the tax — the employer matches it dollar for dollar, and the whole 15.3% funds your own Social Security and Medicare.

Pre-tax

Lowering Today's Taxable Income

taxable = gross − 401(k)comes off pre-tax

The same filer routes $6,000 of pay into a pre-tax 401(k). Because that money is set aside before tax is figured, taxable income falls from $43,900 to $37,900 — and at a 12% marginal rate, that trims about $720 off this year's federal tax.

$37,900taxable income, down from $43,900~$720 less federal tax

No 401(k)$37,900 taxable$6,000 taxed too

With 401(k)$37,900 taxable

A pre-tax contribution comes off income before the tax is figured, so the same dollars lower this year's taxable income and stay invested for later.

Sources: FICA rates — Social Security 6.2%, Medicare 1.45%, 7.65% employee share matched by the employer — and the $184,500 Social Security wage base, from IRS Topic No. 751 and the SSA rate tables; the $16,100 single standard deduction and the 2026 single brackets from IRS Revenue Procedure 2025-32. Checked 2026-08-24. The $60,000 salary and 4% state rate are illustrative; all other figures are derived from them.

Previous Module

Insurance & Retirement

Next Module

ETFs & Mutual Funds