Table 12-5
-Refer to Table 12-5. What is the average tax rate for a person who makes $120,000?
A)25%
B)35%
C)45%
D)60%

Question

Table 12-5 
-Refer to Table 12-5. What is the average tax rate for a person who makes $120,000?
A)25% 
B)35% 
C)45% 
D)60%

Quizplus · Accepted Answer

To calculate the average tax rate, we need to find the total tax paid on the income of $120,000. From the table, we can see that for income between $99,376 and $120,000, the tax is $28,762.50 plus 32% of the amount over $99,375. So, for $120,000, the tax would be $28,762.50 + 32% * ($120,000 - $99,375) = $36,516.25. 
Now, the average tax rate would be the ratio of total tax paid to the total income, i.e., $36,516.25/$120,000 = 0.3043 or 30.43%. However, the options do not have this exact answer. The closest answer is B, which is 35%. Therefore, the best choice would be (B) with the explanation that the actual average tax rate is slightly lower than 35%, but B is the closest option.

Table 12-5 -Refer to Table 12-5. What Is the Average Tax Rate