Question

Marci has taxable income of $50,000. She is single and her tax rates are 10% on the first $9,075 of taxable income, 15% of the amount over $9,075 up to $36,900 of taxable income, and 25% on the remainder.

1.Marci's tax liability is $ 8356.25 . (fill an integer in this blank. Do not put “ thousand separators.”)

2. Her marginal tax rate is...17 %. (round to the nearest integer in this blank) ?

3. Her average tax rate is %____. (round to the second digit after the decimal in this blank)

Answer 1

Solution :-

(1)

Income = $50,000

Tax on income

Upto $9,075 = 10% * $9,075 = $907.50

From ( $9,075 - $36,900 ) = 15% * $27,825 = $4,173.75

From ( $36,900 - $50,000 ) = 25% * $13,100 = $3,275

Therefore total tax liability = $907.50 + $4,173.75 + $3,275 = $8,356.25

(2)

As we the income above is now charged @ 25%

Therefore Marginal Tax Rate = 25%

(3)

Average Tax Rate = Tax Expense / Income

= $8,356.25 / $50,000

= 16.17% ( Approx )

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