If personal income up to and including $25,000 is not taxed,income of $25,001 to $50,000 is taxed at 10%,and income over $50,000 is taxed at 25%,a family earning income equal to $60,000 will pay a marginal tax rate of _____% and a average tax rate of _____%.

Question

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The marginal tax rate is 25% because the income over $50,000 is taxed at this rate. The average tax rate is calculated by dividing the total tax paid by the total income: ($0 for the first $25,000 + $2,500 for the next $25,000 + $2,500 for the remaining $10,000) / $60,000 = 8.3%.

If Personal Income Up to and Including $25,000 Is Not