Jones Brothers Farm Equipment owes $48,329 in tax on a taxable income of $549,600. The company has determined that it will owe $56,211 in tax if its taxable income rises to $575,000. What is the marginal tax rate at this level of income?

Question

Quizplus · Accepted Answer

The marginal tax rate is calculated by the change in tax divided by the change in taxable income. The change in tax is $56,211 - $48,329 = $7,882, and the change in income is $575,000 - $549,600 = $25,400. The marginal tax rate is $7,882 / $25,400 = 0.3103 or 31.03 percent.

Jones Brothers Farm Equipment Owes $48,329 in Tax on a Taxable