Stonefield Company pays taxes of 25% on their first $30,000 of pretax income and 30% on any taxable income in excess of $30,000.The current pretax income is $45,000.What is the marginal tax rate for Stonefield Company?

Question

Quizplus · Accepted Answer

The marginal tax rate for Stonefield Company is the tax rate that applies to the next dollar of income. In this case, since their current pretax income is $45,000, the marginal tax rate applies to any taxable income above $30,000. Since the tax rate on taxable income above $30,000 is 30%, the marginal tax rate is also 30%.

Stonefield Company Pays Taxes of 25% on Their First $30,000