Rusty Antiques has a marginal tax rate of 39percent and an average tax rate of 26.9 percent.If the firm owes $37,265 in taxes,how much taxable income did it earn?

Question

Quizplus · Accepted Answer

Let X be the taxable income.
Then, we have: 
0.39X = 37,265 (from the marginal tax rate) 
X = 95,512.82
Now we can use the average tax rate to calculate the actual tax paid: 
0.269 * 95,512.82 = 25,690.36
Therefore, taxable income is $138,532 (rounded to the nearest dollar).

Rusty Antiques Has a Marginal Tax Rate of 39percent and an Average