Solve the problem. Refer to the table if necessary.
-Andy earned $74,358 from wages as an engineer. Determine his overall tax rate on his gross income, including both FICA and income taxes. Assume he is single and takes the standard
Deduction.

Question

Solve the problem. Refer to the table if necessary. 
-Andy earned $74,358 from wages as an engineer. Determine his overall tax rate on his gross income, including both FICA and income taxes. Assume he is single and takes the standard
Deduction.

Quizplus · Accepted Answer

For 2023, a single filer's standard deduction is $13,850. Subtracting this from Andy's gross income of $74,358 gives a taxable income of $60,508. The FICA tax rate is 7.65% on all his wages, amounting to $5,688.29. For federal income tax, the rates are progressive, so we calculate the tax owed in each bracket up to his taxable income. Adding the FICA and federal income tax, then dividing by his gross income gives an overall tax rate of approximately 23.8%.

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