A company pays taxes of 25% on their first $25,000 of taxable income and 40% on any taxable income in excess of $25,000.The company's current taxable income is $30,000.What is the marginal tax rate?

Question

Quizplus · Accepted Answer

The marginal tax rate refers to the tax rate applied to the last dollar of taxable income. Since the current taxable income of the company is $30,000 and the tax rate for any amount above $25,000 is 40%, the marginal tax rate for this additional $5,000 of income is 40%.

A Company Pays Taxes of 25% on Their First $25,000