Select the correct answer.

Based on the following tax table, how is the tax payable on a taxable income of [tex][tex]$\$[/tex]64,000[tex]$[/tex] calculated?

\begin{tabular}{|c|c|}
\hline Taxable Income & Tax Rate \\
\hline [tex]$[/tex]\[tex]$0$[/tex] to [tex]$\$[/tex]9,875[tex]$[/tex] & [tex]$[/tex]10\%[tex]$[/tex] \\
\hline [tex]$[/tex]\[tex]$9,876$[/tex] to [tex]$\$[/tex]40,125[tex]$[/tex] & [tex]$[/tex]12\%[tex]$[/tex] \\
\hline [tex]$[/tex]\[tex]$40,125$[/tex] to [tex]$\$[/tex]85,525[tex]$[/tex] & [tex]$[/tex]22\%[tex]$[/tex] \\
\hline
\end{tabular}

A. [tex]$[/tex]22\% \times (\[tex]$85,525 - \$[/tex]64,000)[tex]$[/tex]
B. [tex]$[/tex]10\% \times \[tex]$9,875 + 12\% \times (\$[/tex]40,125 - \[tex]$9,875) + 22\% \times (\$[/tex]85,525 - \[tex]$64,000)$[/tex][/tex]
C. [tex][tex]$22\% \times (\$[/tex]64,000 - \[tex]$40,125)$[/tex][/tex]
D. [tex][tex]$10\% \times \$[/tex]9,875 + 12\% \times (\[tex]$40,125 - \$[/tex]9,875) + 22\% \times (\[tex]$64,000 - \$[/tex]40,125)$[/tex]



Answer :

To determine the correct answer, we need to calculate the total tax payable on a taxable income of \[tex]$64,000 using the provided tax brackets. We will apply the tax rate to the portion of the income that falls within each bracket. 1. First Bracket (\$[/tex]0 to \[tex]$9,875): - This portion of the income (\$[/tex]0 to \[tex]$9,875) is taxed at 10%. - Tax: \( \$[/tex]9,875 \times 10\% = \[tex]$9,875 \times 0.10 = \$[/tex]987.50 \)

2. Second Bracket (\[tex]$9,876 to \$[/tex]40,125):
- The next portion of the income (\[tex]$9,876 to \$[/tex]40,125) is taxed at 12%.
- Amount in this bracket: [tex]\( \$40,125 - \$9,875 = \$30,250 \)[/tex]
- Tax: [tex]\( \$30,250 \times 12\% = \$30,250 \times 0.12 = \$3,630 \)[/tex]

3. Third Bracket (\[tex]$40,126 to \$[/tex]85,525):
- The remaining portion of the income up to \[tex]$64,000 falls within this bracket (\$[/tex]40,126 to \[tex]$64,000) and is taxed at 22%. - Amount in this bracket: \( \$[/tex]64,000 - \[tex]$40,125 = \$[/tex]23,875 \)
- Tax: [tex]\( \$23,875 \times 22\% = \$23,875 \times 0.22 = \$5,252.50 \)[/tex]

4. Total Tax Calculation:
- We sum the taxes calculated for each bracket.
- Total Tax: [tex]\( \$987.50 + \$3,630 + \$5,252.50 = \$9,870 \)[/tex]

Therefore, the tax is calculated as:
[tex]\[ 10\% \times \$9,875 + 12\% \times (\$40,125 - \$9,875) + 22\% \times (\$64,000 - \$40,125) \][/tex]

This corresponds to option D:
[tex]\[ \boxed{10\% \times \$9,875 + 12\% \times (\$40,125 - \$9,875) + 22\% \times (\$64,000 - \$40,125)} \][/tex]

Thus, the correct answer is:
[tex]\[ \boxed{D} \][/tex]