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Acc501 GDB 1 Sol Fall 2022

This document provides an example of calculating total tax liability, average tax rate, and marginal tax rate based on different income brackets and tax rates. It shows that total tax liability is $90,000 for an income of $600,000. The average tax rate is 15% while the marginal tax rate is 18%. It concludes that the average tax rate is more beneficial than the marginal tax rate for tax benefits.

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Sth. Bilal Bashir
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92 views1 page

Acc501 GDB 1 Sol Fall 2022

This document provides an example of calculating total tax liability, average tax rate, and marginal tax rate based on different income brackets and tax rates. It shows that total tax liability is $90,000 for an income of $600,000. The average tax rate is 15% while the marginal tax rate is 18%. It concludes that the average tax rate is more beneficial than the marginal tax rate for tax benefits.

Uploaded by

Sth. Bilal Bashir
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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ACC501 GDB 1 Solution Fall 2022

Part A

Computation of Total Tax Liability; Average Tax Rate and the Marginal Tax
Rate.

Income Bracket Tax Rate Taxable Income


0 - 400,000 10% 400,000*10/100 = 40,000
400,001 - 500,000 21% 100,000*21/100 = 21,000
500,001 - 600,000 29% 100,000*29/100 = 29,000
Total 90,000
Total Tax Liability Tax Rate 90,000

Average Tax Rate: Total Tax Liability / Total Income

Average Tax Rate 15% = 90,000/600,000 = .15

Marginal Tax Rate 18%

Part B

Suggest which tax rate can give him more tax benefits.
Average tax rate in beneficial than marginal tax rate

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