Question

Question No.4         

a) The U.S. currently has seven federal income tax brackets, with rates of 10%, 12%, 22%, 24%, 32%, 35% and 37%. If you fall into the 37% bracket, that doesn’t mean that the entirety of your taxable income will be subject to a 37% tax. Instead, 37% is your top marginal tax rate.

 

FEDERAL TAX BRACKETS 2018 – 2019

Tax rate (%)

$0 – $9,525

10

$9,526 – $38,700

12

$38,701 – $82,500

22

$82,501 – $157,500

24

$157,501 – $200,000

32

$200,001 – $500,000

35

$500,001+

37

 

 

i) Create a Mathematical Model that represents the aforementioned information to calculate the annual income tax.

ii) How much annual income tax you will have to pay if your monthly taxable income is      $ 40,000

 

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