To determine the marginal tax rate based on the given income and tax liability, we follow these steps:
1. Identify the Given Values:
- Income: [tex]$40,000
- Tax Liability: $[/tex]5,000
2. Understand the Marginal Tax Rate:
The marginal tax rate is the percentage of additional income that is taxed at a given level.
3. Calculate the Marginal Tax Rate:
The formula to calculate the marginal tax rate is:
[tex]\[
\text{Marginal Tax Rate} = \left( \frac{\text{Tax Liability}}{\text{Income}} \right) \times 100
\][/tex]
4. Substitute the Given Values into the Formula:
[tex]\[
\text{Marginal Tax Rate} = \left( \frac{5000}{40000} \right) \times 100
\][/tex]
5. Perform the Calculation:
- First, divide the tax liability by the income:
[tex]\[
\frac{5000}{40000} = 0.125
\][/tex]
- Then, multiply the result by 100 to convert it to a percentage:
[tex]\[
0.125 \times 100 = 12.5
\][/tex]
6. Conclusion:
Thus, the marginal tax rate is 12.5 percent.
Therefore, the correct answer is:
- a. 12.5 percent.
