Name two common payroll deductions that affect net pay.

• A. Federal income tax withholding and SGLI premiums
• B. Federal income tax withholding and Social Security
• C. SGLI premiums and state tax
• D. Health insurance and retirement contributions

Answer: (A)

Net pay is what you take home after deductions are taken from gross pay. A standard deduction that reduces almost every paycheck is federal income tax withholding, which lowers gross pay to cover your tax obligation. Pairing that with SGLI premiums, a common payroll deduction for Servicemembers' Group Life Insurance, shows two typical deductions that directly reduce take-home pay. Other options mix items that aren’t as universally paired, such as two taxes or two benefit areas, so they don’t illustrate the same everyday payroll deduction pattern as a tax withholding plus an insurance premium.