Question

Laura made 35,000 in taxable income last year. suppose the income tax rate is 10% for the first $8000 plus the 16% for the amount over $8000. How much does Laura pay in income tax for last year?

Answer 1

SInce Laura made more than $8000, we need to find how much above that limit she made, so we add the two different tax brackets:

We can say that Laura made $8000 plus ($35000 - $8000)

for the first $8000 she needs to pay 10%, that is:

10% of $8000 = 0.10 * 8000 = $800

The amount of her income that goes ABOVE $8000 is: (35000 - 8000 = $27000)

so she needs to pay 16% on that difference. that is:

0.16 * 27000 = $4320

The addition of the taxes from the different brackets is the total amount she has to pay:

$800 + $4320 = $5120.

TOTAL to pay: $5120.