Suppose your total taxable income this year is $75,000. You are taxed at a rate of 10 percent on the first $25,000, 20 percent on the next $25,000, and 30 percent on the final $25,000. What is your total income tax?

Question

$2,500

$25,000

$7,500

$15,000

Answer 1

To calculate the total income tax based on the given tax brackets, we can break it down as follows:

1. First $25,000: Taxed at 10% $$25,000\times 0.10=2,500$$

2. Next $25,000 (which is from $25,001 to $50,000): Taxed at 20% $$25,000\times 0.20=5,000$$

3. Final $25,000 (which is from $50,001 to $75,000): Taxed at 30% $$25,000\times 0.30=7,500$$

Now, we can add these amounts together to find the total income tax:

$$2,500+5,000+7,500=15,000$$

Therefore, your total income tax is $15,000.