If Sophia's tax liability increases from $10,000 to $15,000 when her income increases from $30,000 to $40,000, her marginal tax rate is
A) 33 percent.
B) 35 percent.
C) 50 percent.
D) 60 percent.

Question

Quizplus · Accepted Answer

The marginal tax rate is calculated as the change in tax liability divided by the change in income. The change in tax liability is $5,000 ($15,000 - $10,000) and the change in income is $10,000 ($40,000 - $30,000). Therefore, the marginal tax rate is $5,000 / $10,000 = 0.50, or 50 percent.

If Sophia's Tax Liability Increases from $10,000 to $15,000 When