One possible solution to a diminishing Social Security payroll is to increase the Social Security tax by 1.89%. How would such an increase effect the tax on an annual salary of $54,000?
a.
Annual tax would increase by $1,020.60.
b.
Annual tax would increase by $2,327.40.
c.
Annual tax would increase by $3,348.00.
d.
Annual tax would increase by $4,368.60.
To calculate the increase in annual tax, multiply the annual salary by the increase in the Social Security tax rate:
Increase in annual tax = $54,000 * 0.0189
Increase in annual tax = $1,018.60
Therefore, the correct answer is:
a. Annual tax would increase by $1,020.60.
To calculate the tax increase on an annual salary of $54,000, we need to find 1.89% of $54,000.
Step 1: Convert the percentage to decimal form: 1.89% = 0.0189.
Step 2: Multiply the annual salary by the decimal: $54,000 * 0.0189 = $1,018.60.
Therefore, the correct answer is:
a. Annual tax would increase by $1,020.60.