Determine the effective tax rate for a taxable income of [tex]$\$[/tex] 63,425[tex]$. Round the final answer to the nearest hundredth.

A. $[/tex]10 \%[tex]$
B. $[/tex]14.67 \%[tex]$
C. $[/tex]15.18 \%[tex]$
D. $[/tex]22 \%$



Answer :

To determine the effective tax rate for a taxable income of \[tex]$63,425 using the piecewise function given, we'll follow these detailed steps: 1. Identify the correct tax bracket: For a taxable income of \$[/tex]63,425, we need to determine the appropriate tax bracket from the provided chart and piecewise function.

According to the chart, the taxable income \[tex]$63,425 falls into the third bracket: \[ \$[/tex]41,176 - \[tex]$89,075 \quad \text{with a marginal tax rate of} \quad 22\% \] Correspondingly, for this bracket, the piecewise function is: \[ f(x) = 0.22x - 4,323.00 \] 2. Calculate the amount of taxes owed: Substitute \( x = 63,425 \) into the piecewise function: \[ f(63,425) = 0.22 \times 63,425 - 4,323.00 \] Carry out the multiplication first: \[ 0.22 \times 63,425 = 13,953.50 \] Subtract 4,323.00 from the result: \[ 13,953.50 - 4,323.00 = 9,630.50 \] So, the total amount of taxes owed is: \[ f(63,425) = 9,630.50 \] 3. Calculate the effective tax rate: The effective tax rate is given by the ratio of the tax owed to the taxable income, expressed as a percentage. Using the formula: \[ \text{Effective Tax Rate} = \left( \frac{f(x)}{x} \right) \times 100 \] Substitute \( f(x) = 9,630.50 \) and \( x = 63,425 \): \[ \text{Effective Tax Rate} = \left( \frac{9,630.50}{63,425} \right) \times 100 \] Perform the division: \[ \frac{9,630.50}{63,425} \approx 0.1518 \] Convert the decimal to a percentage: \[ 0.1518 \times 100 = 15.18\% \] 4. Round the effective tax rate to the nearest hundredth: The effective tax rate for a taxable income of \$[/tex]63,425 is [tex]\( 15.18\% \)[/tex].

Therefore, the correct answer is:
[tex]\[ \boxed{15.18\%} \][/tex]