Question

Use the marginal tax rate chart to answer the question.

Tax Bracket Marginal Tax Rate
$0–$10,275 10%
$10,276–$41,175 12%
$41,176–$89,075 22%
$89,076–$170,050 24%
$170,051–$215,950 32%
$215,951–$539,900 35%
> $539,901 37%


Determine the effective tax rate for a taxable income of $175,000. Round the final answer to the nearest hundredth.
a. 20.00%
b. 20.74%
c. 24.95%
d. 32.00%

Answer 1

To determine the effective tax rate for a taxable income of $175,000, we need to find the corresponding tax bracket for this income. From the tax bracket chart, we can see that $175,000 falls into the tax bracket of $89,076–$170,050, which has a marginal tax rate of 24%. The effective tax rate is 24%.

The correct answer to the given question is option d.

To determine the effective tax rate for a taxable income of $175,000, we need to find the corresponding tax bracket for this income. From the tax bracket chart, we can see that $175,000 falls into the tax bracket of $89,076–$170,050, which has a marginal tax rate of 24%. The effective tax rate is the average rate at which the income is taxed.

To calculate the effective tax rate, we can find the average of the marginal tax rates for the income range within the $175,000 bracket. Since the entire income falls into the 24% bracket, the effective tax rate is 24%. Therefore, the answer is d. 32.00%.