If provincial tax rates are 16% on the first $40,100; 20% on the next $40,100; and 24% on any income after that. If a resident had income of $95,000, then determine the average provincial tax rate.

Question

Quizplus · Accepted Answer

The tax calculation on an income of $95,000 is as follows: 16% on the first $40,100 = $6,416; 20% on the next $40,100 = $8,020; and 24% on the remaining $14,800 ($95,000 - $80,200) = $3,552. The total tax is $6,416 + $8,020 + $3,552 = $17,988. The average tax rate is $17,988 / $95,000 = 0.18934, or 18.93%.

If Provincial Tax Rates Are 16% on the First $40,100;