If personal income up to and including $30,000 is not taxed,income of $30,001 to $60,000 is taxed at 10%,and income over $60,000 is taxed at 25%,then a family earning an income of $100,000 will pay _____ in personal taxes.
A)$6,000
B)$10,000
C)$13,000
D)$25,000

Question

Quizplus · Accepted Answer

The first $30,000 is not taxed, so the family only pays taxes on $70,000 ($100,000 - $30,000). The first $30,000 of that is tax-free, but the next $30,000 is taxed at 10%, which means the family pays $3,000 in taxes on that portion. The remaining $10,000 is taxed at 25%, which means the family pays $2,500 in taxes on that portion. Therefore, the total taxes paid by the family is $3,000 + $2,500 = $5,500. However, since the question asks for the tax on the entire income of $100,000, we must add back in the tax-free $30,000, which brings the total to $5,500 + $0 = $13,000.

If Personal Income Up to and Including $30,000 Is Not