If the federal government used the progressive tax rate below for individual income tax, calculate the federal income tax owed on a [tex] \$55,000 [/tex] salary.

\begin{tabular}{|r|c|}
\hline
Standard Deduction & \begin{tabular}{c} \$12,200 \end{tabular} \\
\hline
Income Range (\$) & Progressive Tax Rate \\
\hline
\[tex]$0 - \$[/tex]9,700 & 10\% \\
\hline
\[tex]$9,701 - \$[/tex]39,475 & 12\% \\
\hline
\[tex]$39,476 - \$[/tex]84,200 & 22\% \\
\hline
\[tex]$84,201 - \$[/tex]160,275 & 24\% \\
\hline
\$160,276+ & 32\% \\
\hline
\end{tabular}

[tex]\[
\text{Tax} = \$[?]
\][/tex]



Answer :

To calculate the federal income tax owed on a \$55,000 salary given the progressive tax rates, follow these steps:

1. Determine the taxable income:

[tex]\[ \text{Taxable Income} = \text{Salary} - \text{Standard Deduction} \][/tex]

[tex]\[ \text{Taxable Income} = \[tex]$55,000 - \$[/tex]12,200
\][/tex]

[tex]\[ \text{Taxable Income} = \$42,800 \][/tex]

2. Determine the taxes owed for each tax bracket:

- For the first bracket (\[tex]$0 to \$[/tex]9,700), the tax rate is 10%:
[tex]\[ \text{Tax for bracket 1} = 10\% \times \[tex]$9,700 = 0.10 \times \$[/tex]9,700 = \$970
\][/tex]

- For the second bracket (\[tex]$9,701 to \$[/tex]39,475), the tax rate is 12%:
[tex]\[ \text{Taxable amount in bracket 2} = \[tex]$39,475 - \$[/tex]9,700 = \$29,775
\][/tex]
[tex]\[ \text{Tax for bracket 2} = 12\% \times \[tex]$29,775 = 0.12 \times \$[/tex]29,775 = \$3,573
\][/tex]

- For the third bracket (\[tex]$39,476 to \$[/tex]84,200), the tax rate is 22%:
[tex]\[ \text{Taxable amount in bracket 3} = \[tex]$42,800 - \$[/tex]39,475 = \$3,325
\][/tex]
[tex]\[ \text{Tax for bracket 3} = 22\% \times \[tex]$3,325 = 0.22 \times \$[/tex]3,325 = \$731.50
\][/tex]

3. Sum the taxes from all applicable brackets:

[tex]\[ \text{Total Tax Owed} = \[tex]$970 + \$[/tex]3,573 + \[tex]$731.50 = \$[/tex]5,274.50
\][/tex]

Therefore, the federal income tax owed on a \[tex]$55,000 salary is \(\$[/tex]5,274.50\).

To summarize, your taxable income is [tex]\(\$42,800\)[/tex] and the federal income tax owed is approximately [tex]\(\$5,274.16\)[/tex].