A certain state uses the progressive tax rate below for calculating individual income tax. Calculate the state income tax owed on an $70,000 per year salary.
| Income Range ($) | Progressive Tax Rate |
|---|---|
| 0-24,000 | 4% |
| 24,001-52,000 | 6% |
| 52,001+ | 8% |
Tax = $[?]
Answer (2)
Calculate the tax for the first income bracket ($0- 24 , 000 ) a t 4 T_1 = 0.04 \times 24000 = 960$.
Calculate the tax for the second income bracket ($24,001- 52 , 000 ) a t 6 T_2 = 0.06 \times (52000 - 24000) = 1680$.
Calculate the tax for the third income bracket ( 52 , 001 + ) a t 8 T_3 = 0.08 \times (70000 - 52000) = 1440 . − S u m t h e t a x es t o f in d t h e t o t a lt a x : T = T_1 + T_2 + T_3 = 960 + 1680 + 1440 = \boxed{ 4080} .
Explanation
Understanding the Problem We are given a progressive tax system and asked to calculate the total income tax for a person earning $70,000 per year. The tax rates vary based on income brackets. We need to calculate the tax for each bracket and then sum them up to find the total tax.
Calculating Tax for the First Bracket First, we calculate the tax for the income range $0- 24 , 000. T h e t a x r a t e i s 4 T 1 = 0.04 × 24000 = 960 $
Calculating Tax for the Second Bracket Next, we calculate the tax for the income range $24,001-$52,000. The tax rate is 6%. The taxable income in this bracket is $52,000 - $24,000 = 28 , 000. S o , t h e t a x f or t hi s b r a c k e t i s : T 2 = 0.06 × ( 52000 − 24000 ) = 0.06 × 28000 = 1680 $
Calculating Tax for the Third Bracket Then, we calculate the tax for the income range $52,001 and above. The tax rate is 8%. The taxable income in this bracket is $70,000 - $52,000 = 18 , 000. S o , t h e t a x f or t hi s b r a c k e t i s : T 3 = 0.08 × ( 70000 − 52000 ) = 0.08 × 18000 = 1440 $
Calculating Total Tax Finally, we sum the taxes calculated for each income bracket to find the total state income tax owed: T = T 1 + T 2 + T 3 = 960 + 1680 + 1440 = 4080
Final Answer Therefore, the total state income tax owed on a 70 , 000 p erye a rs a l a ry i s \boxed{ 4080} .
Examples
Progressive tax systems are designed so that people with higher incomes pay a larger percentage of their income in taxes. This is used to fund public services like education, infrastructure, and healthcare. Understanding how progressive tax works helps individuals plan their finances and understand their contribution to society. For example, knowing the tax brackets and rates allows you to estimate your tax liability and make informed decisions about investments and savings.
The total state income tax owed on a salary of $70,000 is $4,080. This is calculated by summing the tax owed from three income brackets: $960 from the first bracket, $1,680 from the second, and $1,440 from the third. The calculations follow the progressive tax rates of 4%, 6%, and 8%.
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