The simplest income tax calculation for a single person filing federal income ta

Question

The simplest income tax calculation for a single person filing federal income taxes in the United States involves applying a standard deduction, personal exemption and marginal tax rates to the annual income of the taxpayer. For tax year 2015, the standard deduction for an individual was $6300 and the personal exemption was $4000. The 2015 tax rates vary by income bracket and are given in the table below.

To compute the tax liability on a given income, first the deduction and exemption amounts are subtracted, then each portion of the income is taxed at the marginal rate according to the table. For example, for an income of $51,939 (US median income in 2014) you first apply the standard $6,300 deduction and the $4,000 exemption to get a taxable income of $51,939-$6,300-$4000 = $41,639. Then to compute the tax liability you have:

which equals $6203.50. You can calculate an "effective tax rate" based on the original income as

which equals 11.9%.

Write a function that accepts total income as a single input. Your function should apply the standard deduction and exemption before using the marginal rates given in the table above to compute the total tax liability. Also compute the effective tax rate and return it's value (decimal value, not percent) as the second output of the function.

Please copy and paste your matlab code.

Tax Rate Income Range 10% $0.01 $9,225.00 15% $9,225.01-$37,450.00 25% $37,450.01-$90,750.00 28% $90,750.01-$189,300.00 33% $189,300.01-$411,500.00 35% $411,500.01-$413,200.00 39.6% Over $413,200

Explanation / Answer

function [totaltax taxrate] = tax(income)
std_ded = 6300;
exempt = 4000;
taxable_income = income - std_ded-exempt;
if(taxable_income<= 9225 && taxable_income>= 0.01)
totaltax = 0.1*taxable_income;
taxrate = totaltax/income;
elseif(taxable_income>9225 && taxable_income<=37450)
totaltax =0.1*9225+0.15*(taxable_income-9225);
taxrate = totaltax/income;
elseif(taxable_income>37450 && taxable_income<=90750)
totaltax = 0.1*9225+0.15*(37540-9225)+0.25*(taxable_income-37540);
taxrate = totaltax/income;
elseif(taxable_income>90750 && taxable_income<=189300)
totaltax = 0.1*9225+0.15*(37540-9225)+0.25*(90750-37540)+0.28*(taxable_income-90750);
taxrate = totaltax/income;
elseif(taxable_income>189300 && taxable_income<=411500)
totaltax = 0.1*9225+0.15*(37540-9225)+0.25*(90750-37540)+0.28*(189300-90750)+0.33*(taxable_income-189300);
taxrate = totaltax/income;
elseif(taxable_income>411500 && taxable_income<=413200)
totaltax =0.1*9225+0.15*(37540-9225)+0.25*(90750-37540)+0.28*(189300-90750)+0.33*(411500-189300)+0.35*(taxable_income-411500);
taxrate = totaltax/income;
else
totaltax = 0.1*9225+0.15*(37540-9225)+0.25*(90750-37540)+0.28*(189300-90750)+0.33*(411500-189300)+0.35*(413200-411500)+0.396*(taxable_income-413200);
taxrate = totaltax/income;
end
end

OUTPUT:

>> [totaltax taxrate] = tax(51939)

totaltax =

6.1945e+03

taxrate =

0.1193

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