Jim and Anna are married and have a 2016 taxable income of $280,000.They also received $20,000 of tax-exempt income.Their effective tax rate is:

Question

Quizplus · Accepted Answer

To calculate the effective tax rate, we need to determine the total tax liability before credits, and divide that by the taxable income plus tax-exempt income. 
According to the IRS tax tables for 2016, the tax liability for a married couple with a taxable income of $280,000 is $67,606.50. Adding the $20,000 of tax-exempt income, the total income is $300,000. 
So, the effective tax rate is: 
$67,606.50 / $300,000 = 0.225 (rounded to three decimal places)
Therefore, the effective tax rate is 22.6% (rounded to one decimal place), which is closest to choice B.

Jim and Anna Are Married and Have a 2016 Taxable