Andrew earns $45,300 in taxable income annually, and pays federal income taxes of $5,345.40. What is Andrew’s net federal income tax rate?
a.
8.47%
b.
15.1%
c.
11.8%
d.
9.1%
The net federal income tax rate is calculated by dividing the amount of federal income taxes paid by the taxable income and multiplying by 100.
Net Federal Income Tax Rate = (Federal Income Taxes / Taxable Income) x 100.
Using the given values:
Net Federal Income Tax Rate = ($5,345.40 / $45,300) x 100.
Calculating the value inside the parentheses:
Net Federal Income Tax Rate = (0.1178) x 100.
Calculating the product:
Net Federal Income Tax Rate = 11.78%.
Therefore, the answer is c. 11.8%.
To calculate Andrew's net federal income tax rate, divide the amount of federal income taxes paid by his taxable income and multiply by 100.
Net Federal Income Tax Rate = (Federal Income Taxes Paid / Taxable Income) x 100
In this case, the calculation would be as follows:
Net Federal Income Tax Rate = ($5,345.40 / $45,300) x 100
Net Federal Income Tax Rate = 0.117 x 100
Net Federal Income Tax Rate = 11.7%
Therefore, Andrew's net federal income tax rate is approximately 11.7%. The closest option provided is option c. 11.8%.