Question

A. What is the average tax rate? (Do not round intermediate calculations and enter

your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
b. What is the marginal tax rate? (Do not round intermediate calculations and enter your answer as a percent rounded to the nearest whole number, e.g., 32.)

Answer 1

The average tax rate is the total tax paid divided by total income, while the marginal tax rate is the tax rate on the last dollar earned, often increasing as income increases.

Step-by-step explanation:

The average tax rate is the ratio of total taxes paid to total income. For example, if a person earns $20,000 and pays $2,581.25 in taxes, their average tax rate would be calculated as $2,581.25 divided by $20,000, resulting in 0.129 or 12.9%. On the other hand,

the marginal tax rate refers to the tax rate paid on the last dollar of income. In a tiered tax system, this rate can increase as the individual's income increases. To illustrate, if a person earns $35,000, with an income up to $9,075 taxed at 10%, from $9,075 to $36,900 at 15%, and beyond $36,900 at 25%, their marginal tax rate is 15% because $35,000 falls within the 15% tax bracket.