The tax rates are as shown. What is the average tax rate for a firm with taxable income of $127,513? A.36.76% B. 20.00% C. 28.35% D. 39.00% E.25.86%Taxable IncomeTax Rate$0 – 50,00015%50,001 – 75,00025%75,001 – 100,00034%100,001 – 335,00039% Solution This firm falls in the fourth tax bracket, therefore, it will have to pay all the taxes till third bracket and some part of the fourth tax bracket, below is the tax calculation: Income range Amount Tax rate Tax = amount x tax rate 0-50000 50000 15% 7500 5001-75000 25000 25% 6250 75001-100000 25000 34% 8500 100001-127513 27513 39% 10730.07 32980.07 Average tax rate = total tax/ taxable income = 32980.07/ 127513 = 25.86% Income range Amount Tax rate Tax = amount x tax rate 0-50000 50000 15% 7500 5001-75000 25000 25% 6250 75001-100000 25000 34% 8500 100001-127513 27513 39% 10730.07 32980.07.

1. The tax rates are as shown.
What is the average tax rate for a firm with taxable income of $127,513?
A.36.76%
B. 20.00%
C. 28.35%
D. 39.00%
E.25.86%Taxable IncomeTax Rate$0 – 50,00015%50,001 – 75,00025%75,001 –
100,00034%100,001 – 335,00039%
Solution
This firm falls in the fourth tax bracket, therefore, it will have to pay all the taxes till third
bracket and some part of the fourth tax bracket, below is the tax calculation:
Income range
Amount
Tax rate
Tax = amount x tax rate
0-50000
50000
15%
7500
5001-75000
25000
25%
6250
75001-100000
25000
34%
8500
100001-127513
27513
39%
10730.07
32980.07

2. Average tax rate = total tax/ taxable income
= 32980.07/ 127513
= 25.86%
Income range
Amount
Tax rate
Tax = amount x tax rate
0-50000
50000
15%
7500
5001-75000
25000
25%
6250
75001-100000
25000
34%
8500
100001-127513
27513
39%
10730.07
32980.07