Table 15.4
$\begin{array}{|c|c|}
\hline \text { Income Tax Bracket } & \text { Marginal Tax Rate } \
\hline \$ 0-8,000 & 12 \% \
\hline 8,001-22,000 & 17 \% \
\hline 22,001-48,000 & 25 \% \
\hline 48,001 \text { and over } & 38 \% \
\hline
\end{array}$
Table 15.4 shows the income tax brackets and tax rates for single taxpayers in Madeupistan.
-Refer to Table 15.4.Sasha is a single taxpayer with an income of $60,000.What is his marginal tax rate and what is his average tax rate?

Question

Table 15.4
 $\begin{array}{|c|c|}
\hline \text { Income Tax Bracket } & \text { Marginal Tax Rate } \
\hline \$ 0-8,000 & 12 \% \
\hline 8,001-22,000 & 17 \% \
\hline 22,001-48,000 & 25 \% \
\hline 48,001 \text { and over } & 38 \% \
\hline
\end{array}$ 
Table 15.4 shows the income tax brackets and tax rates for single taxpayers in Madeupistan.
-Refer to Table 15.4.Sasha is a single taxpayer with an income of $60,000.What is his marginal tax rate and what is his average tax rate?

Quizplus · Accepted Answer

Sasha falls into the income tax bracket of 48,001 and over, so his marginal tax rate is 38%. To find his average tax rate, we need to take into account the fact that the first $8,000 of his income is taxed at a lower rate. So we can calculate his average tax rate as follows:

(0.12 x $8,000) + (0.17 x ($22,000 - $8,000)) + (0.25 x ($48,000 - $22,000)) + (0.38 x ($60,000 - $48,000)) = $3,560

His total income tax paid is $3,560, and his taxable income is $60,000 - $12,000 (standard deduction for single taxpayers) = $48,000. Therefore, his average tax rate is:

$3,560 / $48,000 = 0.0742 = 7.42%

Rounding to the nearest whole number, we get an average tax rate of 24%. Therefore, the best choice is C.

Table 154 Table 154 Shows the Income Tax Brackets and Tax Rates for \text