Question

1. Felix and Freddie are married with annual taxable income of $230,000. They pay income tax according to the following schedule: Over--------But Not Over---------Tax Rate $0.................$43,850...................15% $43,850..........$105,950..................??? $105,950........ $361,450.................31% If the total personal income tax they pay is $59,316, which of the following comes closest to the tax rate for income between $43,850 and 105,950 (the middle tax rate)?.

   	a.	24%
   	b.	23%
   	c.	25%
   	d.	21%
   	e.	22%

Answer 1

Felix and Freddie are married with annual taxable income of $230,000. They pay income tax according to the following schedule: Over--------But Not Over---------Tax Rate $0.................$43,850...................15% $43,850..........$105,950..................??? $105,950........ $361,450.................31% If the total personal income tax they pay is $59,316, which of the following comes closest to the tax rate for income between $43,850 and 105,950 (the middle tax rate)?.

	a.	24%
	b.	23%
	c.	25%
	d.	21%
	e.	22%

Annual Taxable Income = $230,000

Total personnal income Tax = 59,316

Calculating the Middle Tax rate by assuming it as X:-

Tax rate	Tax Slab	Tax calculation	Tax ($)
15%	0 - 43850	43850*15%	6577.5
X	43850 - 105950	(105,950 - 43850)*X	62100*X
31%	105,950 - 361,450	(230,000-105,950)*31%	38455.5
TOTAL			45033 + 62100*X

Total Income Tax as per above computation = $45033 + $62100*X

So, $59,316 =$45033 + $62100*X

X= 23%

So, the following comes closest to the tax rate for income between $43,850 and 105,950 (the middle tax rate) is 23%

Hence, Option B

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