A company pays taxes of 25% on their first $25,000 of pre- tax income, and 35% on any taxable income in excess of $25,000. The marginal tax rate, if current pre- tax income is $30,000, is:

Question

Quizplus · Accepted Answer

The marginal tax rate is the rate of tax applied to the last dollar of income. For income over $25,000, the tax rate is 35%. Since the current pre-tax income is $30,000, the marginal tax rate is 35%.

A Company Pays Taxes of 25% on Their First $25,000