Question

Andrew earns $45,300 in taxable income annually, and pays federal income taxes of $5,345.40. What is Andrew’s net federal income tax rate?
a.
8.47%
b.
15.1%
c.
11.8%
d.
9.1%

Answer 1

The net federal income tax rate is calculated by dividing the amount of federal income taxes paid by the taxable income and multiplying by 100.

Net Federal Income Tax Rate = (Federal Income Taxes / Taxable Income) x 100.

Using the given values:
Net Federal Income Tax Rate = ($5,345.40 / $45,300) x 100.

Calculating the value inside the parentheses:
Net Federal Income Tax Rate = (0.1178) x 100.

Calculating the product:
Net Federal Income Tax Rate = 11.78%.

Therefore, the answer is c. 11.8%.