Question

A firm paid taxes of $51,740 for the year. What is the average tax rate for the firm if it had taxable income of $201,300?

Answer 1

To find the average tax rate for the firm, you can use the formula for the average tax rate, which is:

\[
\text{Average Tax Rate} = \frac{\text{Total Taxes Paid}}{\text{Taxable Income}}
\]

In this case:

- Total Taxes Paid = $51,740
- Taxable Income = $201,300

Now, substitute these values into the formula:

\[
\text{Average Tax Rate} = \frac{51,740}{201,300}
\]

Calculating this:

\[
\text{Average Tax Rate} \approx 0.2565
\]

To express it as a percentage, multiply by 100:

\[
\text{Average Tax Rate} \approx 25.65\%
\]

Therefore, the average tax rate for the firm is approximately **25.65%**.