Select the correct answer.

Question

Based on the following tax table, how is the tax payable on a taxable income of $64,000 calculated?

Taxable Income Tax Rate
$0 to $9,875 10%
$9,876 to $40,125 12%
$40,125 to $85,525 22%
A.
10% x $9,875 + 12% x ($40,125 - $9,875) + 22% x ($85,525 - $64,000)
B.
22% x ($85,525 - $64,000)
C.
10% x $9,875 + 12% x ($40,125 - $9,875) + 22% x ($64,000 - $40,125)
D.
22% x ($64,000 - $40,125)

Answer 1

To calculate the tax payable on a taxable income of $64,000 using the provided tax table, we need to break down the tax calculation based on the applicable tax rates for each portion of the income.

• The first $9,875 is taxed at 10%.
• The income between $9,876 and $40,125 is taxed at 12%.
• The income from $40,126 to $64,000 is taxed at 22%.

Here’s the breakdown:

1. First $9,875:

   • Tax: $9,875 x 10% = $987.50

2. Next portion ($9,876 to $40,125):

   • Income in this bracket = $40,125 - $9,875 = $30,250
   • Tax: $30,250 x 12% = $3,630.00

3. Next portion ($40,126 to $64,000):

   • Income in this bracket = $64,000 - $40,125 = $23,875
   • Tax: $23,875 x 22% = $5,243.50

Now to calculate total tax payable:

• Total Tax = $987.50 + $3,630 + $5,243.50 = $9,861

From the options provided, the one that correctly reflects the calculation of the tax on a taxable income of $64,000 is:

C. 10% x $9,875 + 12% x ($40,125 - $9,875) + 22% x ($64,000 - $40,125)

So the correct answer is C.