Total tax liability , Marginal tax rate , Average tax rate are $5,839.50 , 22% , 12.98%
Given that;
Total taxable income Jamie have = $45,000
Tax rate (10%) on first $9525
Tax rate (12%) on $9525 to $38,700
Tax rate (22%) on more than $38,700
Find:
- Total tax liability
- Marginal tax rate
- Average tax rate
Computation:
Tax on first $9,525 = 10%(9,525)
Tax on first = $952.50
Tax on amount between $,9525 to $38,700 = 12%(38,700 - 9,525)
Tax on amount between $,9525 to $38,700 = $3,501
Tax on more than $38,700 = 22%(45,000 - 38,700)
Tax on more than $38,700 = $1,386
Total tax liability = 952.50 + 3,501 + 1,386
Total tax liability = $5,839.50
Marginal tax rate = Maximum tax rate
Marginal tax rate = 22%
Average tax rate = Total tax liability / Total taxable income
Average tax rate = 5,839.50 / 45,000
Average tax rate = 12.98%
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