Final answer:
The realtor with an annual income of $125,135 and a tax rate of 7% owes $8,759.45 in income tax.
Step-by-step explanation:
To calculate the amount of income tax the realtor needs to pay, we apply the given income tax rate to their annual income. Given the realtor's annual income of $125,135 and a tax rate of 7%, the calculation is as follows:
Income Tax = Annual Income × Tax Rate
Income Tax = $125,135 × 0.07
Now, let's perform the multiplication:
Income Tax = $8,759.45
Therefore, the realtor needs to pay $8,759.45 in income tax.
Income tax is a mandatory levy imposed by governments on individuals, businesses, and other entities based on their earnings. It is a percentage of income and is a primary source of government revenue, funding public services and programs. The tax rates often vary based on income levels, with higher earners generally subjected to higher rates. Taxable income includes wages, salaries, investment gains, and other forms of income. Governments use progressive, proportional, or regressive tax systems to determine how the tax burden is distributed across different income groups. Income tax compliance requires individuals and businesses to file annual returns detailing their income and deductions.