A country has two income tax brackets: people pay 10% on their first $50,000 and 20% on everything they earn over $50,000. If someone earns $75,000, what is that person's marginal tax rate?

Question

Quizplus · Accepted Answer

The marginal tax rate refers to the percentage of tax that is paid on the last dollar earned. In this case, the person's income of $75,000 falls into both tax brackets, with the first $50,000 taxed at 10% and the remaining $25,000 taxed at 20%. Therefore, the marginal tax rate is 20%.

A Country Has Two Income Tax Brackets: People Pay 10