Alpha, Inc. earned $95,000 in net income in 2017 and paid $20,548.50 in taxes. Alpha, Inc. earned $95,001 in net income in 2018 and paid $20,548.84 in taxes. What is the marginal tax rate for Alpha, Inc.?

Question

Quizplus · Accepted Answer

The marginal tax rate is calculated by the change in taxes divided by the change in income. The change in taxes is $20,548.84 - $20,548.50 = $0.34, and the change in income is $95,001 - $95,000 = $1. The marginal tax rate is $0.34 / $1 = 34%.