Question

If the first $20,000 of your income (or any portion thereof) is taxed at 10%, and the next $30,000 of your income (or any portion thereof) is taxed at 20%, and any income you make above that is taxed at a 30% rate, then a person who earned an income of $500,000 will pay the following amount in taxes:A. $156,000B. $100,000C. $143,000D. $150,000

Answer 1

Answer:

Total tax paid will be $143000

So option (B) will be correct answer

Explanation:

We have given total income = $500000

It is given that on first $20000 tax rate is 10%

So tax paid on $20000 = $20000×0.1 = $2000

And on next $30000 tax rate is 20%

So tax om $30000 = 0.2×$30000 = $6000

Now it is given that after that tax is 30%

So amount left = $500000 - $50000 = $450000

So tax on this amount = $450000×0.03 = $135000

So total tax = $135000+$6000+$2000 = $143000

So option (C) will be the correct answer