Patricia has taxable income of $40,000 on which she pays income tax of $5,745.If Patricia's taxable income increases by $2,000,she will pay an additional tax of $500.What is Patricia's marginal tax rate?

Question

Quizplus · Accepted Answer

The marginal tax rate is calculated as the additional tax paid divided by the additional income. Here, Patricia pays an additional $500 on an additional $2,000 of income, which results in a marginal tax rate of 25% ($500 / $2000 = 0.25 or 25%).

Patricia Has Taxable Income of $40,000 on Which She Pays