Patricia has taxable income of $40,000 on which she pays income tax of $5,935.If Patricia's taxable income increases by $2,000,she will pay an additional tax of $500.What is Patricia's marginal tax rate?

Question

Quizplus · Accepted Answer

The marginal tax rate is calculated by dividing the additional tax paid by the additional income. Here, $500 additional tax on $2,000 additional income results in a marginal tax rate of 25% ($500 / $2000 = 0.25 or 25%).

Patricia Has Taxable Income of $40,000 on Which She Pays