Question

Calculating Taxable Income

Taxable income	Rate
$0 — $9,525	10.0%
$9,526 — $38,700	12.0%
$38,701 — $82,500	22.0%
$82,501 — $157,500	24.0%
$157,501 — $200,000	32.0%
$200,001 — $500,000	35.0%
$500,001 or more	37%

Using the previous tax table, compute the tax liability for the individual in the scenario presented, rounding the liability to the nearest dollar. In addition, use the dropdown lists to identify the marginal tax rate and average tax rate for the individual in the scenario.

Rina’s Tax Scenario

Rina is a professional with taxable income of $42,700.

What is Rina’s total tax liability?

(Note: Round your answer to the nearest cent, if necessary.)

What is Rina’s top marginal tax rate?     

What is Rina's average tax rate?     

Answer 1

Part A:

Slab	Income	Tax Rate	Tax Liabilitiy
$ 0 - $ 9525	$   9,525.00	10%	$    952.50
$ 9526 - $ 38700	$ 29,175.00	12%	$ 3,501.00
$ 38701 - $ 82500	$   4,000.00	22%	$    880.00
Tax Liabilitiy			$5,333.50

Part B:

Marginal Tax Rate is the Tax rate applicable on Immediate $ earned. i.e 22% ( as slab is not completed, Only $ 4000 is part of this slab.)

Part C:

Avg Tax Rate = Tax Liability / Taxable Income

= $ 5333.50 / $ 42700

= 0.1249 i.e 12.49%