Question
Duela Dent is single and had $196,000 in taxable income. Use the rates from Table 2.3....
Duela Dent is single and had $196,000 in taxable income. Use the rates from Table 2.3. a. What is the average tax rate? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the marginal tax rate? (Enter your answer as a percent rounded to the nearest whole number, e.g., 32.) Average tax rate b. Marginal tax rate
TABLE 2.3 Tax Rate Taxable income 10% 12 Personal tax rates for 2018 (unmarried Individuals) 0 9,525 9,525- 38,700 38,700 82,500 82,500- 157,500 157.500- 200,000 200,000- 500,000 500,000+
Answers
Duela Dent Single taxable Income = $196,000
Calculating the Total Tax Liability:
Tax Rate Marginal Tax Slab Calculation Taxable Income ($) 10% 0-9525 9525*10% 952.5 12% 9525-38700 (38700-9275)*12% 3501 22% 38700-82500 (82500-38700)*22% 9636 24% 82500-157500 (157500-82500)*24% 18000 32% 157500-200,000 (196000-157500)*32% 12320 Tax Liability 44,409.5 a). Average Tax rate = Tax Liability/Taxable Income
= $44,409.5/196000
= 22.66%
b). Marginal Tax rate = Tax rate applied to the last dollar earned and that is 32%
hence, Marginal Tax rate = 32%
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