Question

Assume you are single and earning $60,000 per year, calculate your disposable income given a standard deduction of $12,000, the tax table below for federal income tax, 7.65% for FICA, and a 5% state income tax calculated on taxable income. What is your average and marginal tax rates? Rate Unmarried Taxpayer Married, filing.joint return 10% Up to $9,700 Up to $19,400 12% Over $9,700 Over $19,400 22% Over $39,475 Over $78,950 24% Over $84,200 Over $168,400 Disposable income: Average tax rate: Marginal tax rate:

Answer 1

Disposable income = $46,592

Average tax rate= 10.70%

Marginal tax rate = 22%

	Particulars	Amount
a	Total earnings	$        60,000
b	Standard deduction	$        12,000
c=a-b	Taxable earnings	$        48,000
	Income tax:
	Upto $9,700	$              970
	$9701-$39,475	$          3,573
	$39,475-$48,000	$          1,876
d	Total income tax	$          6,419
e=a*7.65%	FICA @ 7.65%	$          4,590
f=d*5%	State income tax	$          2,400
g=a-d-e-f	Disposable income	$       46,592
h=d/a	Average tax rate	10.70%
i	Marginal tax rate	22%