Final answer:
Tax planning should consider average tax rates that individuals will pay or save.
Step-by-step explanation:
The subject of this question is Business and the grade level is College.
When analyzing tax planning, it is important to consider the average tax rates that an individual will pay or save by taking a specific action. The average tax rate is the ratio of taxes paid to income and gives an indication of what fraction of an individual's income goes towards taxes. For example, if someone has an income of $20,000 and pays $2,581.25 in taxes, their average tax rate would be 12.9 percent.
Understanding the difference between average tax rate and marginal tax rate is also important. The marginal tax rate is the rate paid on an additional dollar of income, while the average tax rate represents the overall tax burden as a percentage of income.