The income tax requires that taxpayers pay 10% on the first $40,000 of income and 20 percent on all income over $40,000.Karen paid $6,000 in taxes.What were her marginal and average tax rates?

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Karen's marginal tax rate is 20% because she pays this rate on income over $40,000. Her average tax rate is 12% because she paid $6,000 in taxes on her total income, which is $50,000 (calculated as $4,000 on the first $40,000 and $2,000 on the remaining $10,000). $6,000/$50,000 = 12%.

The Income Tax Requires That Taxpayers Pay 10% on the First