Question

The tax rates are as shown. taxable income tax rate $0 – 50,000 15% 50,001 – 75,000 25% 75,001 – 100,000 34% 100,001 – 335,000 39% what is the average tax rate for a firm with taxable income of $129,513?

Answer 1

The average tax rate for a firm with taxable income of $129,513 is calculated by adding the taxes from each income bracket and dividing by the total taxable income, resulting in an average tax rate of 26.06%.

Step-by-step explanation:

To calculate the average tax rate for a firm with taxable income of $129,513, we need to understand how the progressive tax system works and apply the tax rates to the corresponding income brackets.

The firm's taxable income falls into the following tax brackets:

• $0 to $50,000 at 15%
• $50,001 to $75,000 at 25%
• $75,001 to $100,000 at 34%
• $100,001 to $335,000 at 39%

Given that the firm's income is $129,513, the tax calculation would be:

• Tax on the first $50,000 = 0.15 x $50,000 = $7,500
• Tax on the next $25,000 ($50,001 to $75,000) = 0.25 x ($75,000 - $50,000) = $6,250
• Tax on the next $25,000 ($75,001 to $100,000) = 0.34 x ($100,000 - $75,000) = $8,500
• Tax on the remaining $29,513 ($100,001 to $129,513) = 0.39 x ($129,513 - $100,000) = $11,510.07

Total tax paid = $7,500 + $6,250 + $8,500 + $11,510.07 = $33,760.07

To find the average tax rate, we divide the total tax paid by the total taxable income:

Average tax rate = $33,760.07 / $129,513 = 0.2606 or 26.06%

The average tax rate is not the same as the marginal rate. The marginal tax rate is the rate of tax that the firm pays on its last dollar of income, which in this case would be 39%.

Answer 2

To get the answer, first you have to identify at which rate is your taxable income falls. From the rage of 100,001 – 335,000, it have 39%. Then you will just simple multiply it.
Income x 0.39 = tax rate
the answer is $50,510.07.