Question

Travis loves working with children, and so gets a job working at a daycare center. Travis estimates that his taxable income for the year, after adjustments and deductions, will be $forty six thousand.

Use the information in the scenario and in the table below to answer the questions.
Tax Rate
Taxable Income Range
Tax Amount
ten%
$zero - $nine thousand, five hundred twenty five
ten% of taxable income
twelve%
$nine thousand, five hundred twenty six - $thirty eight thousand, seven hundred
$nine hundred fifty two point five + twelve% of income over $nine thousand, five hundred twenty five
twenty two%
$thirty eight thousand, seven hundred one - $eighty two thousand, five hundred
$four thousand, four hundred fifty three point five + twenty two% of income over $thirty eight thousand, seven hundred
twenty four%
$eighty two thousand, five hundred one - $one hundred fifty seven thousand, five hundred
$fourteen thousand, eighty nine point five + twenty four% of income over $eighty two thousand, five hundred
thirty two%
$one hundred fifty seven thousand, five hundred one - $two hundred thousand
$thirty two thousand, eighty nine point five + thirty two% of income over $one hundred fifty seven thousand, five hundred
thirty five%
$two hundred thousand, one - $five hundred thousand
$forty five thousand, six hundred eighty nine point five + thirty five% of income over $two hundred thousand
thirty seven%
Over $five hundred thousand
$one hundred fifty thousand, six hundred eighty nine point five + thirty seven% of income over $five hundred thousand

Answer 1

Marginal tax rate is the rate at which an additional dollar of income is taxed. To calculate the tax liability, we need to determine the tax bracket and use the formula provided in the table.

Step-by-step explanation:

Marginal tax rate is the rate at which an additional dollar of income is taxed. It is important to understand how marginal tax rate works in order to calculate the taxes owed at different income levels. Let's take the example of Travis who estimates his taxable income for the year to be $46,000. To determine Travis' marginal tax rate, we need to look at the tax rate brackets provided in the table.

1. Travis falls in the second tax bracket which is taxed at a rate of 12%.
2. Travis' taxable income falls in the range of $9,526 to $38,700.
3. So, Travis' marginal tax rate is 12%.

To calculate Travis' tax liability, we can use the formula provided in the table. For Travis, the tax amount would be $952.50 plus 12% of income over $9,525.

To summarize, Travis' marginal tax rate is 12% because his taxable income falls in the corresponding tax bracket. Using the table, we can calculate his tax liability based on his taxable income using the provided formula.