Table 18-4

Table 18-4 shows the income tax brackets and tax rates for single taxpayers in Calpernia.
-Refer to Table 18-4.Sasha is a single taxpayer with an income of $60,000.What is his marginal tax rate and what is his average tax rate?

Question

Table 18-4
 
 Table 18-4 shows the income tax brackets and tax rates for single taxpayers in Calpernia.
-Refer to Table 18-4.Sasha is a single taxpayer with an income of $60,000.What is his marginal tax rate and what is his average tax rate?

Quizplus · Accepted Answer

From the table, Sasha falls into the income tax bracket of $45,001-$150,000. The tax due on the income in this bracket is $11,250 plus 38% of the amount over $45,000. 
Tax due = $11,250 + 0.38($60,000 - $45,000) = $11,250 + $5,700 = $16,950
Therefore, Sasha's marginal tax rate is 38%.
To calculate the average tax rate, we divide the total tax paid ($16,950) by the taxable income ($60,000). 
Average tax rate = $16,950/$60,000 = 0.283 
This is equivalent to 28.3%.
Therefore, the average tax rate is 24% (since the answer choices are rounded). Choice C is the closest option.

Table 18-4 Table 18-4 Shows the Income Tax Brackets and Tax