Asked by
Austin Codrington
on Dec 17, 2024Verified
If your income is $40,000 and your income tax liability is $5,000, your
A) marginal tax rate is 8 percent.
B) average tax rate is 8 percent.
C) marginal tax rate is 12.5 percent.
D) average tax rate is 12.5 percent.
Marginal Tax Rate
The rate at which the last dollar of income is taxed, indicating how much of an additional dollar earned will be taken in taxes.
Average Tax Rate
The proportion of total income that is paid as tax, calculated by dividing the total amount of tax paid by the total income.
Income Tax Liability
The total amount of income tax that an individual or corporation owes to the government, based on their taxable income.
- Learn about the distinguishing features of marginal and average tax rates.
- Apply insights on tax rates to estimate tax liabilities.
Verified Answer
AH
Learning Objectives
- Learn about the distinguishing features of marginal and average tax rates.
- Apply insights on tax rates to estimate tax liabilities.