Question

You make $40,000 per year. You have been offered a promotion and a $5,000 raise per year. Your average federal income tax rate will go up from 10% to 15% per year. Should you take the new job and the raise?

Answer 1

Yes, Accept the new Job and raise

Step-by-step explanation:

With the old Job, the annual income is $40,000 and a tax rate of 10%.

The annual tax obligation is 10% of $40,000

=10/100 x $40,000

=0.1 x $40,000

=$4,000

Annual take home is $40,000 -$4,000

=$36,000

With the new salary, the tax obligation will be

Tax rate=15%

Salary =$45,000

=15/100 x $45,000

=0.15 x $45,000

$6,750

The new take home pay is $45,000- $,6750

=$38,250

With the new Job, the take-home pay increases from $36,000 to $38,250.

The new Job and raise should be accepted.