Question

use the marginal tax rate chart to answer the question.
marginal tax rate chart
tax bracket | marginal tax rate
$0–$10,275 | 10%
$10,276–$41,175 | 12%
$41,176–$89,075 | 22%
$89,076–$170,050 | 24%
$170,051–$215,950 | 32%
$215,951–$539,900 | 35%

$539,901 | 37%

determine the effective tax rate for a taxable income of $75,400. round the final answer to the nearest hundredth.
10.05%
16.27%
22.00%
24.90%

Explanation:

Step1: Identify tax brackets and calculate tax for each bracket

• For $0 - \$10,275$: Tax = $10,275\times0.10 = 1,027.5$
• For $\$10,276 - \$41,175$: Amount = $41,175 - 10,275 = 30,900$; Tax = $30,900\times0.12 = 3,708$
• For $\$41,176 - \$89,075$: Amount = $75,400 - 41,175 = 34,225$; Tax = $34,225\times0.22 = 7,529.5$

Step2: Sum up the taxes

Total tax = $1,027.5 + 3,708 + 7,529.5 = 12,265$

Step3: Calculate effective tax rate

Effective tax rate = $\frac{\text{Total tax}}{\text{Taxable income}}=\frac{12,265}{75,400}\approx0.1627$ or $16.27\%$

Answer:

16.27%