Marc,a single taxpayer,earns $60,000 in taxable income and $5,000 in interest from an investment in city of Birmingham Bonds.Using the U.S.tax rate schedule for year 2017,what is his effective tax rate? (Use tax rate schedule in the text)

Question

Quizplus · Accepted Answer

Using the tax rate schedule for 2017, Marc's taxable income falls into the 25% tax bracket. His tax on this income would be $13,750 [(0.10 x $9,325) + (0.15 x $28,625) + (0.25 x ($60,000 - $37,950))]. His effective tax rate is his total tax liability divided by his total income, which is:
($13,750 + $5,000) ÷ $60,000 = 0.2967 or 29.67%
Thus, his effective tax rate is 16.52% (rounded to two decimal places).

Marc,a Single Taxpayer,earns $60,000 in Taxable Income and $5,000 in Interest