Question

A proposed change in income tax suggests charging 25% on a person's income up to $42,000 and then 40% on any income above that. If a person has an income of $68,000, what will their income tax be under the proposal? Round your answer to the nearest dollar.

Answer 1

$20,900

Explanation:

-The income tax is 25% on first $42,000 and 40% on all amounts greater than $42000

#Tax on first $42,000:

`Tax=Tax \ Rate* Income\\\\=0.25* 42000\\\\=10500`

#Tax on the income balance will be:

`Balance=68000-42000=26000\\\\Tax=0.4* 26000\\\\=10400`

Total income tax=10400+10500=$20,900

Hence, the proposed income tax will be $20,900