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Determine the effective tax rate for a taxable income of [tex]$\$[/tex]75,400[tex]$. Round the final answer to the nearest hundredth.

A. $[/tex]10.05\%[tex]$
B. $[/tex]16.27\%[tex]$
C. $[/tex]22.00\%[tex]$
D. $[/tex]24.90\%[tex]$

Marginal Tax Rate Chart:
\begin{tabular}{|l|l|}
\hline Tax Bracket & Marginal Tax Rate \\
\hline \$[/tex]0-\[tex]$10,275 & 10\% \\
\hline \$[/tex]10,276-\[tex]$41,175 & 12\% \\
\hline \$[/tex]41,176-\[tex]$89,075 & 22\% \\
\hline \$[/tex]89,076-\[tex]$170,050 & 24\% \\
\hline \$[/tex]170,051-\[tex]$215,950 & 32\% \\
\hline \$[/tex]215,951-\[tex]$539,900 & 35\% \\
\hline $[/tex]>\[tex]$539,901$[/tex] & 37\% \\
\hline
\end{tabular}



Answer :

GinnyAnswer
Let's determine the effective tax rate for a taxable income of [tex]$75,400 using the given tax brackets. 1. Analyze the income up to each tax bracket: - First Bracket: $[/tex]0 - [tex]$10,275 at 10% - Taxable amount: $[/tex]10,275
- Tax: [tex]$10,275 * 0.10 = $[/tex]1,027.50

- Second Bracket: [tex]$10,276 - $[/tex]41,175 at 12%
- Taxable amount: [tex]$41,175 - $[/tex]10,275 = [tex]$30,900 - Tax: $[/tex]30,900 * 0.12 = [tex]$3,708 - Third Bracket: $[/tex]41,176 - [tex]$89,075 at 22% - Taxable amount: $[/tex]75,400 - [tex]$41,175 = $[/tex]34,225
- Tax: [tex]$34,225 0.22 = $[/tex]7,529.50

2. Sum these individual tax amounts to get the total tax:

- Total Tax: [tex]$1,027.50 + $[/tex]3,708 + [tex]$7,529.50 = $[/tex]12,265

3. Calculate the effective tax rate:

- Effective Tax Rate = (Total Tax / Total Income) 100
- Effective Tax Rate = ([tex]$12,265 / $[/tex]75,400) * 100 ≈ [tex]$16.27\%$[/tex]

So, the effective tax rate for a taxable income of [tex]$75,400 is approximately $[/tex]16.27\%[tex]$. Therefore, the correct option is: $[/tex]16.27\%$.

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