Question

Oliver's income is $60,000 a year. He lives and works in Hawaii. If the state income tax rate in Hawaii is about 3%, how much will Oliver pay in state income tax?

a) $1,800
b) $1,500
c) $1,200
d) $1,000

Answer 1

Oliver will pay $1,800 in state income tax, which is 3% of his $60,000 yearly income.

Step-by-step explanation:

An income tax is a tax imposed on individuals or entities (taxpayers) in respect of the income or profits earned by them (commonly called taxable income). Income tax generally is computed as the product of a tax rate times the taxable income. Taxation rates may vary by type or characteristics of the taxpayer and the type of income.

The tax rate may increase as taxable income increases (referred to as graduated or progressive tax rates). The tax imposed on companies is usually known as corporate tax and is commonly levied at a flat rate.

If Oliver's income is $60,000 a year and he lives in Hawaii where the state income tax rate is approximately 3%, we can calculate the amount of state income tax he will pay by multiplying his income by the tax rate.

To calculate: $60,000 * 0.03 = $1,800.

Therefore, Oliver will pay $1,800 in state income tax, which corresponds to option (a).