Question

Amanda made $30,000 in taxable income last year.

Suppose the income tax rate is 10% for the first $8500 plus 15% for the amount over $8500.
How much must Amanda pay in income tax for last year?

Answer 1

Answer: 4075 dollars

Step-by-step explanation:

10% of $8500 = 0.10*8500 = 850

For the first $8500 she made, she pays $850 in tax.

The remaining amount over 8500 is then taxed at 15%

30,000 - 8,500 = 21,500

So the remaining $21,500 she earned is taxed at the higher bracket of 15%

15% of 21500 = 0.15*21500 = 3225

She has to pay an additional $3225 in tax.

The total tax bill comes to 850+3225 = 4075 dollars

This is an effective rate of 4075/30000 = 0.1358 = 13.58% roughly.