Asked by Taylor Marler on May 08, 2024
Verified
Xavier is single and has taxable income of $47,375.His average tax rate is:
A) 10%.
B) 15%.
C) 16%.
D) 25%.
Average Tax Rate
The average tax rate is the percentage of total income paid in taxes, calculated by dividing the total amount of taxes paid by the total income before taxes.
Taxable Income
The portion of an individual's or corporation's income that is subject to income tax after allowances, exemptions, and deductions.
- Clarify the distinctions between marginal and average tax rates.
Verified Answer
ML
Manish LimbuMay 10, 2024
Final Answer :
C
Explanation :
To calculate Xavier's average tax rate, we need to first find his marginal tax rate, which is the rate he pays on his last dollar of income. Based on the 2019 tax brackets for a single filer, Xavier falls into the 22% tax bracket. However, we know that he has taxable income of $47,375, which is below the upper limit of that bracket ($82,500). As a result, Xavier's marginal tax rate is 22%.
To find his average tax rate, we need to divide his total tax liability by his taxable income. Using the IRS tax tables for a single filer with taxable income of $47,375, we find that Xavier's tax liability is $8,422.50. Dividing $8,422.50 by $47,375 gives us an average tax rate of approximately 17.8%, which rounds up to 16%. Therefore, the answer is C.
To find his average tax rate, we need to divide his total tax liability by his taxable income. Using the IRS tax tables for a single filer with taxable income of $47,375, we find that Xavier's tax liability is $8,422.50. Dividing $8,422.50 by $47,375 gives us an average tax rate of approximately 17.8%, which rounds up to 16%. Therefore, the answer is C.
Learning Objectives
- Clarify the distinctions between marginal and average tax rates.