Question

Duela Dent is single and had $189,000 in taxable income. Using the rates from Table 2.3 in the chapter, calculate her income taxes. What is the average tax rate? What is the marginal tax rate? Note: Do not round intermediate calculations and round your income tax answer to the nearest whole number, 32 the average and marginal tax rate answers as a percent rounded to 2 decimal places, e.g., 32.16. TABLE 2.3 Personal tax rates for 2021 (Unmarried Individuals

Answer 1

1. Duela Dent's income taxes amount to $41,328.

2. Duela Dent's average tax rate is 21.88%.

We will apply the tax rates to her taxable income of $189,000 to calculate Duela Dent's income taxes,

Taxable Income: $189,000

Her her income taxes using the provided tax rates:

- First $9,950 at 10%: $9,950 * 0.10 = $995

- Next $30,575 ($40,525 - $9,950) at 12%: $30,575 * 0.12 = $3,669

- Next $45,850 ($86,375 - $40,525) at 22%: $45,850 * 0.22 = $10,087

- Next $78,550 ($164,925 - $86,375) at 24%: $78,550 * 0.24 = $18,852

- Remaining income at 32%: ($189,000 - $164,925) * 0.32 = $7,725

The sum of all the taxes is:

= $995 + $3,669 + $10,087 + $18,852 + $7,725

= $41,328

Average Tax Rate = Total Tax / Taxable Income

= $41,328 / $189,000

= 0.218666667

= 21.88%