If Mary earns $80,000 in taxable income and pays $40,000 in taxes, her marginal tax rate must be 50 percent.

Question

Quizplus · Accepted Answer

Marginal tax rate refers to the rate at which the last dollar of income is taxed, not the overall percentage of income paid in taxes. Mary's overall tax rate is 50% based on the given numbers, but her marginal tax rate could be different depending on the tax brackets she falls into.

If Mary Earns $80,000 in Taxable Income and Pays $40,000