A country has two income tax brackets: people pay 10% on their first $50,000 and 20% on everything they earn over $50,000. If someone earns $75,000, what is that person's average tax rate?

Question

Quizplus · Accepted Answer

The person earned $75,000, which means they fall into both tax brackets. They pay 10% on the first $50,000 which is $5000. Then, they pay 20% on the remaining $25,000 which is $5000. Total tax paid is $10000.
The average tax rate is (tax paid / income earned) * 100% = (10000 / 75000) * 100% = 13.3%. 
Therefore, the answer is B.

A Country Has Two Income Tax Brackets: People Pay 10