What are your average and marginal tax rates

Assignment Help Accounting Basics

Reference no: EM131988322

Problem

Suppose you are a typical person in the U.S. economy. You pay 4 percent of your income in a state income tax and 15.3 percent of your labor earnings in federal payroll taxes (employer and employee shares combined). You also pay federal income taxes as in Table 2. How much tax of each type do you pay if you earn $30,000 a year? Taking all taxes into account, what are your average and marginal tax rates? What happens to your tax bill and to your average and marginal tax rates if your income rises to $60,000?

Table 2

On Taxable Income...	The Tax Rate Is...
From $0 to $9,075	10%
From $9,076 to $36,900	15%
From $36,901 to $89,350	25%
From $89,351 to $186,350	28%
From $186,351 to $405,100	33%
From $405,101 to $406,750	35%
From $406,751 and above	39.6%

Reference no: EM131988322

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