At a taxable income of $50,000 Mari's income tax is $10,500.When her taxable income rises to $55,000 her income tax is $11,750.Based on this information,what is Mari's marginal tax rate?

Question

Quizplus · Accepted Answer

Mari's income tax increased by $1,250 ($11,750 - $10,500) when her taxable income increased by $5,000 ($55,000 - $50,000).

Therefore, her marginal tax rate is:

Marginal tax rate = increase in tax / increase in taxable income

Marginal tax rate = $1,250 / $5,000 = 0.25

Marginal tax rate = 25%

At a Taxable Income of $50,000 Mari's Income Tax Is