Refer to the table below: Compute the taxes on a taxable income of $125,000 in o

Question

Refer to the table below:

Compute the taxes on a taxable income of $125,000 in order to answer the following questions.


(a) What is the marginal tax rate?

Instructions: Enter your responses as a percent rounded to the nearest whole number.

%

(b) What is the nominal tax rate?

Instructions: Enter your responses as a percent rounded to the nearest two decimal places.

2014 Tax Data   Tax Bracket Marginal Tax Rate $0-9,075 10% $9,075-36,900 15 $36,900-89,350 25 $89,350-186,350 28 $186,350-405,100 33 $405,100-406,750 35 Over $406,750 39.6

Explanation / Answer

Total tax on $125,000 = $28,175.75

A) Marginal Tax rate = 28,175.75 / 125,000 = 22.54%

B) Nomina Tax rate = 28%

0-9075 9075 10% 907.5 9075-36900 27825 15% 4173.75 36900-89350 52450 25% 13112.5 89350-186350 35650 28% 9982 125000 28175.75

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