Question

1. Increasing your 401k deduction will ________ your gross pay and __________your federal taxes in the current year

Answer 1

The answer would be Decrease, Decrease.

Step-by-step explanation:

Increasing your 401 k deduction, will Decrease your gross pay and Decrease your Federal Taxes in the current year.

Gross pay of a person is his pay without deductions of any taxes. When taxes are deducted from the salary, the remaining amount is called the Net Salary. So when 401 k are deducted from the salary, the gross pay will decrease, and in turns, the federal taxes will also decrease, because a percentage of taxes is deducted from the gross salary. So when gross salary decreases, the taxes decreases and vice versa.

Answer 2

I believe the answer is Decrease;Decrease
401k Deduction is taken directly from your salary and allocated into your pension account (decreasing gross pay)
But, the deduction will also reduce the amount of taxable income that you have to pay, which lead to a decrease in the Federal Tax on that year.