Suppose a taxpayer has an income of $120,000 and a taxable income of $80,000,and pays $20,000 in taxes.If the taxpayer says she is taxed at a 25 percent tax rate,she is referring to the

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The nominal tax rate is simply the rate at which taxes are being applied to the taxpayer's income. In this case, the taxpayer paid $20,000 in taxes on a taxable income of $80,000, which means the nominal tax rate is 25%. The other two options, marginal tax rate and effective tax rate, are different measures of taxation. The marginal tax rate refers to the tax rate that applies to the last dollar of income earned, while the effective tax rate is the taxpayer's total tax liability divided by their taxable income.

Suppose a Taxpayer Has an Income of $120,000 and a Taxable