Jurisdiction M imposes an individual income tax based on the following schedule.

Rate Income bracket
5% $-0- to $50,000
+ 8% $50,001 to $200,000
+ 12% $200,001 and above

Mrs. Hill has $190,000 taxable income. Determine the marginal tax rate.

Question

Jurisdiction M imposes an individual income tax based on the following schedule.

Rate	Income bracket
5%	$-0- to $50,000
+ 8%	$50,001 to $200,000
+ 12%	$200,001 and above

Mrs. Hill has $190,000 taxable income. Determine the marginal tax rate.

BlackTom AI · Accepted Answer

First, we need to identify how the tax schedule applies to Mrs. Hill's income.
Under the given schedule, the 5% rate applies to income from $0 up to $50,000. The 8% rate applies to income from $50,001 up to $200,000. The 12% rate applies only to income above $200,000.
Option 1: 5.00% — This would be the marginal rate if all of Mrs. Hill’s income fell within the first bracket, but since her income exceeds $50,000, only the initial portion is taxed at 5% and the remainder falls into higher brackets. Therefore, 5% is incorrect as the marginal rate.
Option 2: 8.00% — The last portion of Mrs. Hill’s income (from $50,001 up to $190,000) falls within the 8% bracket. The marginal rate is the rate applied to the next dollar earned, which in this case is within the 8% bracket. This makes 8.00% the correct marginal rate for income at $190,000.
Option 3: 8.33% — This value does not correspond to any bracket in the schedule and seems to be a miscalculation or a blended-average figure. It’s not the rate that applies to the top-dollar portion of her income.
Option 4: 12.00% — The 12% bracket only starts at $200,001; since Mrs. Hill’s income is $190,000, none of her income is taxed at 12%. Therefore, this option is incorrect for the given income level.
In summary, the marginal rate is determined by the highest bracket that applies to any portion of the income, which for $190,000 falls in the 8% bracket (the range $50,001 to $200,000).

SP25-BL-BUS-A327-1377 Quiz 1

Jurisdiction M imposes an individual income tax based on the following schedule. Rate Income bracket 5% $-0- to $50,000 + 8% $50,001 to $200,000 + 12% $200,001 and above Mrs. Hill has $190,000 taxable income. Determine the marginal tax rate.

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