Asked by Wahidah Mat Nasir on Jun 20, 2024
Verified
If your taxable income was $40,000 and you paid $3,000 in federal income tax,what was your average tax rate?
Average Tax Rate
The proportion of the total taxable income paid in taxes, calculated by dividing the total tax amount by the total income.
Taxable Income
The amount of income used to calculate how much tax an individual or a company owes to the government.
Federal Income Tax
The tax levied by the United States federal government on the annual earnings of individuals, corporations, trusts, and other legal entities.
- Differentiate and calculate the nuances between marginal and average tax rates, focusing on their unique computation methods.
Verified Answer
MD
Michele DaltonJun 20, 2024
Final Answer :
ATR = taxes paid/taxable income = $3,000/$40,000 = 7.5 percent
Learning Objectives
- Differentiate and calculate the nuances between marginal and average tax rates, focusing on their unique computation methods.