Final answer:
The average tax rate for a person who paid taxes of $8,016.30 on a taxable income of $63,220 is 12.68%.
Step-by-step explanation:
The average tax rate is a crucial metric in assessing the proportion of income that an individual pays in taxes. In this scenario, where the individual paid $8,016.30 in taxes on a taxable income of $63,220, the calculation involves dividing the total tax paid by the taxable income.
[ text{Average Tax Rate} = left( frac{text{Total Tax Paid}}{text{Taxable Income}} right) times 100 ]
Substituting the given values:
[ text{Average Tax Rate} = left( frac{8,016.30}{63,220} right) times 100 ]
This computation results in an average tax rate of approximately 12.66%. This percentage signifies that, on average, the individual contributes 12.66% of their taxable income toward taxes.
Understanding the average tax rate is vital for individuals to comprehend their overall tax burden and plan their finances accordingly. It provides insights into the proportional impact of taxation on income, aiding in financial decision-making and long-term planning.
As tax implications play a significant role in personal finance, being aware of one's average tax rate contributes to a more informed and strategic approach to managing finances.