Question

Ivan earns $44,000 in gross income. He takes the standard deduction of $13,850.

What percentage of his taxable income will he pay in taxes? Round your answer to
the nearest whole percent. Use the table below for the taxable margins.

Answer 1

11%

Explanation:

You want to know the percentage of Ivan's gross income of $44,000 that goes to taxes if he takes the standard deduction of $13,850.

Taxable income

Ivan's taxable income is the remaining amount after subtracting the standard deduction from his gross income:

$44,000 -13,850 = $30,150

Tax

Ivan pays 10% tax on the first $9875, so ...

$9875 · 0.10 = $987.50

And he pays 12% tax on the remaining amount of his taxable income:

($30,150 -9,875) · 0.12 = $2,433.00

Ivan's total tax is ...

$987.50 +2,433.00 = $3420.50

Percentage

The effective tax rate on Ivan's taxable income is ...

3420.50/30150 × 100% ≈ 0.1134 × 100% ≈ 11%

Ivan will pay about 11% of his taxable income in taxes.