The income tax in a certain state is figured at 2% of the first 1,000, 3% of the first next 2,000, 4% of the next 3,000, and 5% thereafter. Find the tax on an income of $25,000
Just add up the terms. The tax is
20+60+120+.05(25000-1000-2000-3000)
= 200 + .05*19000
= ...
1070
To find the tax on an income of $25,000, we will calculate the tax amount based on the given income tax rates.
First, let's break down the income into different tax brackets:
- The first $1,000 will be taxed at a rate of 2%. So, the tax on this portion will be 0.02 * $1,000 = $20.
- The next $2,000 will be taxed at a rate of 3%. Therefore, the tax on this portion will be 0.03 * $2,000 = $60.
- The next $3,000 will be taxed at a rate of 4%. Hence, the tax on this portion will be 0.04 * $3,000 = $120.
Now, we have $1,000 + $2,000 + $3,000 = $6,000 of the income accounted for.
The remaining income to be taxed is $25,000 - $6,000 = $19,000.
This remaining income of $19,000 will be taxed at a rate of 5%. So, the tax on this portion will be 0.05 * $19,000 = $950.
Finally, let's sum up the tax amounts for each portion:
$20 + $60 + $120 + $950 = $<<20+60+120+950=1150>>1,150.
Therefore, the tax on an income of $25,000 is $1,150.