Table 12-10
-Refer to Table 12-10. If Willie has $170,000 in taxable income, his average tax rate is
A)23.8%.
B)24.3%.
C)25.9%.
D)28.0%.

Question

Table 12-10 
-Refer to Table 12-10. If Willie has $170,000 in taxable income, his average tax rate is
A)23.8%. 
B)24.3%. 
C)25.9%. 
D)28.0%.

Quizplus · Accepted Answer

To calculate Willie's average tax rate, we need to find the total amount of tax he owes based on the given tax brackets.

For the first $9,700 of income, his tax rate is 10%, so he owes 0.10 x $9,700 = $970 in taxes.

For the next $29,775 of income ($9,701 to $39,475), his tax rate is 12%, so he owes 0.12 x $29,775 = $3,573 in taxes.

For the next $44,725 of income ($39,476 to $84,200), his tax rate is 22%, so he owes 0.22 x $44,725 = $9,839.50 in taxes.

For the next $45,400 of income ($84,201 to $129,600), his tax rate is 24%, so he owes 0.24 x $45,400 = $10,896 in taxes.

Finally, for the remaining $40,400 of income ($129,601 to $170,000), his tax rate is 32%, so he owes 0.32 x $40,400 = $12,928 in taxes.

So, Willie's total tax owed is $970 + $3,573 + $9,839.50 + $10,896 + $12,928 = $38,206.50.

His average tax rate is calculated by dividing his total taxes by his taxable income:

$38,206.50 ÷ $170,000 = 0.2247

To convert to a percentage, we multiply by 100:

0.2247 x 100 = 22.47%, which rounds up to 24.3%. Therefore, the answer is B.

Table 12-10 -Refer to Table 12-10. If Willie Has $170,000 in Taxable