Answer:
(b) 21.77%
Explanation:
Using the given tax rate table, you want to know the effective tax rate on a taxable income of $192,700.
Tax
The tax will be the sum of the taxes due in each of the brackets. This sum can be simplified to make the tax computation a little less work.
tax = 0.10(10275) +0.12(41175 -10275) +0.22(89075 -41175) +0.24(17050 -89075) +0.32(192700 -170050)
= 10275(0.10 -0.12) +41175(0.12 -0.22) +89075(0.22 -0.24) +170050(0.24 -0.32) +192700(0.32)
= 192700(0.32) -(10275(0.02) +41175(0.10) +89075(0.02) +170050(0.08))
= 192,700(0.32) -19708.50
tax = 41955.50
Effective rate
The tax as a percentage of the taxable income is ...
tax/income × 100% = 41955.50/192700 × 100% ≈ 21.77%
The effective tax rate is about 21.77%.
__
Additional comment
We can use this same idea to simplify the tax table all around. The various tax computations are shown in the second attachment. Interestingly, the tax due is the maximum of the computations for the different brackets. The graph shows the effective tax rate (%) as a function of income. The effective rate for $192,700 is marked.
Because the tax tables are written with discontinuities, there can be some confusion about the amount that fits in each bracket. For example, the tax on 10276 is not 10% of 10275 plus 12% of zero. Rather it is 10% of 10275 plus 12% of (10276 -10275), for a total of $1027.62.
<95141404393>