State income tax, federal payroll tax, federal income tax, average tax rate, marginal tax rate.
Explanation of Solution
State income tax amount can be calculated as follows:
State income tax is $1,200.
Federal payroll tax can be calculated as follows:
Federal payroll tax is $4,590.
Federal income tax can be calculated as follows:
The Federal income tax is $4,046.25.
Average tax rate can be calculated as follows:
The average tax rate is 32.78%.
Marginal tax rate is calculated as follows:
The marginal tax rate is 34.3%.
New state income tax amount can be calculated as follows:
The State income tax is $2,400.
Federal payroll tax can be calculated as follows:
The Federal payroll tax is $9,180.
Federal income tax can be calculated as follows:
The federal income tax is $410,856.25.
New average tax rate can be calculated as follows:
The average tax rate is 37.4%.
New marginal tax rate can be calculated as follows:
The marginal tax rate is 44.3%.
Concept introduction:
Marginal tax rate: Marginal tax rate is the rate by which the taxes increase from an additional dollar of income.
Average tax rate: Average tax rate is defined as the total amount of taxes paid divided by total income.
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