Question

Use this tax table to find how much tax you need to pay on a taxable income of $40,000.

Answer 1

According to table, $40,000 falls in the 3rd category (between $31,850 - $77,100).

The tax is "$4,386.25 + 25% of amount OVER 31,850"

Translating this to maths, we have:

$4386.25+(0.25)(40,000-31,850)\\=4386.25+(0.25)(8150)\\=4386.25+2037.5\\=6423.75$

Choice A is correct.

ANSWER: A

Answer 2

A

40,000-31,850= 8,150times .25= 2,037.50

4,386.25+2,037.50= $6,423.75