Final answer:
To calculate Sally's individual income tax payable, subtract allowable deductions from assessable income to find the taxable income and then apply relevant tax rates.
Step-by-step explanation:
The question asks us to calculate Sally's individual income tax payable for the fiscal year 2022/23 when her assessable income is $150,000 and she has $571 in allowable deductions.
To calculate the income tax, we subtract the allowable deductions from the assessable income to find the taxable income. Then we apply the relevant income tax rates.
Firstly, we determine Sally's taxable income:
Taxable income = Assessable income - Allowable deductions
Taxable income = $150,000 - $571
Taxable income = $149,429
Next, the tax rates provided must be applied to this taxable income. Typically, tax is calculated within brackets, where each bracket has a different tax rate.
It looks like the information provided is consistent with the tax brackets outlined by the IRS but we need the complete current tax bracket to calculate the total tax.
For instance, if the income between $0 and $9,075 is taxed at 10%, from $9,075 to $36,900 at 15%, and so on, we allocate parts of Sally's income into these brackets and apply the corresponding tax percentage.
If Sally was within the top tax bracket, her marginal tax rate would be the highest rate applied to the income in that bracket.
However, without the actual tax bracket rates beyond a certain income, we cannot compute her exact income tax payable.
Once you know the tax brackets she falls into, you can add up the taxes for each bracket to get her total tax payable.