If your income is $65,000, with income up to $17,000 subject to a 10% tax rate and incomeabove $17,000 subject to 15% tax rate, then your average tax rate is
Question
If your income is 17,000 subject to a 10% tax rate and income above $17,000 subject to 15% tax rate, then your average tax rate is
Solution
To calculate the average tax rate, you first need to calculate the total tax paid.
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Calculate the tax for the income up to 17,000 * 10% = $1,700.
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Calculate the tax for the income above 17,000 is 17,000 = 48,000 * 15% = $7,200.
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Add the tax paid on both portions of the income to get the total tax paid: 7,200 = $8,900.
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Finally, calculate the average tax rate by dividing the total tax paid by the total income, and then multiply by 100 to get a percentage: (65,000) * 100 = 13.69%.
So, the average tax rate is 13.69%.
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