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 20%,then a family earning an income of $75,000 will pay a n AVERAGE tax rate of _____%.

Question

Quizplus · Accepted Answer

The first $25,000 is not taxed, so the remaining $50,000 will be taxed at a rate of 10%. 
($50,000 - $25,000) * 10% = $2,500 
The remaining $25,000 will be taxed at a rate of 20%. 
$25,000 * 20% = $5,000 
Total tax paid = $2,500 + $5,000 = $7,500 
Average tax rate = ($7,500 / $75,000) * 100% = 10%.

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