Question

You have a $45,500 annual gross income and exemptions totaling $3,000. If the state tax is 1.5% on the first $2,500 and 3% on amounts over $2,500, what is your annual income tax obligation?

Answer 1

Total annual gross income = $45500

Total exemptions = $3000

So, total taxable income =
`45500-3000=42500`

For an amount up to $2500, rate of interest = 1.5%

So ,
`(1.5)/(100)*2500` = 37.50

For amount above $2500, rate of interest is = 3%

Hence, amount to be calculated on 3% is
`42500-2500=40000`

So 3% of 40000 =
`(3)/(100)*40000` =1200

Hence, total tax becomes =
`1200+37.50` = 1237.50

Hence annual tax is $1237.50