In: Finance
The tax rates for a particular year are shown below:
Taxable Income | Tax Rate | |
$0 – 50,000 | 15 | % |
50,001 – 75,000 | 25 | % |
75,001 – 100,000 | 34 | % |
100,001 – 335,000 | 39 | % |
What is the average tax rate for a firm with taxable income of
$122,513?
Taxable liability for firm-1,22,513
Total tax-
On first 100000= (50,000*15%)+(25000*25%)+(25000*34%)= (7500+6250+8500)= 22250
On Next 22513=(22513*39%)= 8780.07
Total tax= (8780.07+22250)= 31030.07
Average tax rate= (total tax / total taxable income)
= (31030.07/122513)= 25.3279%