Questions: 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 23,470. Round the final answer to the nearest hundredth. 11.12% 12.00% 13.49% 15.63%

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 23,470. Round the final answer to the nearest hundredth.
11.12%
12.00%
13.49%
15.63%

Transcript text: 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 $\$ 23,470$. Round the final answer to the nearest hundredth. 11.12\% 12.00\% 13.49\% 15.63\%

Solution

Solution Steps

Step 1: Calculate Total Tax

To find the total tax for a taxable income of $ \$ 23,470 $, we apply the marginal tax rates for each applicable tax bracket. The calculations for each bracket are as follows:

For the bracket $ \$ 0 - \$ 10,275 $: \[ \text{Tax} = (10,275 - 0) \times 0.10 = 1,027.50 \]
For the bracket $ \$ 10,276 - \$ 23,470 $: \[ \text{Tax} = (23,470 - 10,276) \times 0.12 = 1,585.68 \]

Adding these amounts gives the total tax: \[ \text{Total Tax} = 1,027.50 + 1,585.68 = 2,613.18 \]

Step 2: Calculate Effective Tax Rate

The effective tax rate is calculated by dividing the total tax by the taxable income and then multiplying by 100 to express it as a percentage: \[ \text{Effective Tax Rate} = \left( \frac{2,613.18}{23,470} \right) \times 100 \approx 11.12\% \]