What is your margin tax rate________ and what is your average tax rate_________?
During the year you earned $48,000 after deductions and exceptions and paid $8,188 in taxes.
Tax rate over up to
10% 0 8,350
15% 8,350 33,950
25% 33,950 82,250
28% 82,250 171,550
33% 171,550 372,950
35% 372,950
The marginal tax rate is the additional tax payable for an additional dollar of taxable income.
$48,000 taxable income falls in the 25% bracket (taxable incomes between $33,950 and $82,250), therefore the marginal tax rate is 25%.
The average tax rate is the tax payable divided by the taxable income.
The tax payable is $8187.50 calculated according to the table. The tax authorities usually round to the nearest dollar, which makes $8188.
The taxable income is $48,000.
The average tax rate is therefore $8,188/$48000= 17.1%
To determine the margin tax rate and average tax rate, we need to know the taxable income and the corresponding tax brackets. In this case, you provided the amount of taxes paid ($8,188) and the total income after deductions and exceptions ($48,000).
To calculate the margin tax rate, we need to find the tax bracket that the taxable income falls into. Since we don't have the information regarding deductions and exceptions, we will assume that the taxable income is equal to the total income ($48,000).
Looking at the tax brackets you provided, the taxable income of $48,000 falls into the 25% tax bracket. To calculate the margin tax rate, we need to find the difference between the next tax bracket's upper limit and the current taxable income. In this case, the difference is: $82,250 - $48,000 = $34,250.
The margin tax rate is calculated by dividing the taxes owed in the next tax bracket by the difference. However, since we are already in the highest tax bracket, the margin tax rate would be the same as the current tax bracket's rate, which is 25%.
To calculate the average tax rate, we divide the taxes paid ($8,188) by the total income ($48,000) and multiply by 100 to get a percentage.
Average Tax Rate = (Taxes Paid / Total Income) * 100
Average Tax Rate = ($8,188 / $48,000) * 100 = 17.06%
Therefore, the margin tax rate is 25% and the average tax rate is approximately 17.06%.