Question

Calculating Taxable Income

Taxable income	Rate
$0 — $9,525	10.0%
$9,526 — $38,700	12.0%
$38,701 — $82,500	22.0%
$82,501 — $157,500	24.0%
$157,501 — $200,000	32.0%
$200,001 — $500,000	35.0%
$500,001 or more	37%

Using the previous tax table, compute the tax liability for the individual in the scenario presented, rounding the liability to the nearest dollar. In addition, use the dropdown lists to identify the marginal tax rate and average tax rate for the individual in the scenario.

Edison’s Tax Scenario

Edison is a young professional with taxable income of $85,000 as an advertising account executive.

What is Edison’s total tax liability?

(Note: Round your answer to the nearest cent, if necessary.)

What is Edison’s top marginal tax rate?     

What is Edison's average tax rate?     

Answer 1

a) Edison's tax liability Taxable income of Edison $ 85000 Garliability + (101. x 95 25] + [2+/- (439 70 – $9525 vo 22°)(2 82500 - $38700] (240). * { $ 8500 $82500] ] = $952.5 + $3501 + $9636 + $600 - $14689.5 3 6) Edison's top marginal tax rate highest slab in which tarpayeri income falls in this case it is 24). Top marginal tax rate is the tax rate = 24% So, top morginal c) Edisons Average tar rate Tax liability $14689.5 Average fax rate Taxable income $ 85000 = 17.28%