Final answer:
To determine the effective tax rate for a taxable income of $180,900 using the marginal tax rate chart, find the tax rate range that includes $180,900. Calculate the tax amount for that range by subtracting the upper limit from the taxable income and multiplying by the tax rate. To find the effective tax rate, divide the tax amount by the taxable income and multiply by 100.
Step-by-step explanation:
The marginal tax rate is the tax rate incurred on an additional dollar of income. To determine the effective tax rate for a taxable income of $180,900 using the marginal tax rate chart, you need to find the corresponding tax rate range that includes $180,900. Then, you can calculate the tax amount for that range and divide it by the taxable income to find the effective tax rate.
Let's assume the marginal tax rate chart has the following ranges and tax rates:
- $0 to $50,000 taxed at 10%
- $50,001 to $100,000 taxed at 15%
- $100,001 and above taxed at 20%
Since $180,900 falls within the $100,001 and above range, the tax rate for this income is 20%. To calculate the tax amount, subtract the upper limit ($100,001) from the taxable income ($180,900) and multiply by the tax rate (20%).
Tax amount = ($180,900 - $100,001) x 20% = $16,180.00.
To find the effective tax rate, divide the tax amount by the taxable income and multiply by 100.
Effective tax rate = ($16,180.00 / $180,900) x 100 = 8.95%.