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Charlie made $40,000 in taxable income last year.Suppose the income tax rate is 15% for the first $9000 plus 17% for the amount over $9000.How much must Charlie pay in income tax for last year?

Question

Charlie made 40,000intaxableincomelastyear.Supposetheincometaxrateis1540,000 in taxable income last year.Suppose the income tax rate is 15% for the first 9000 plus 17% for the amount over $9000.How much must Charlie pay in income tax for last year?

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Solution

Step 1: Calculate the tax for the first 9000Thetaxrateforthefirst9000 The tax rate for the first 9000 is 15%. So, Charlie's tax for this portion of his income is 9000159000 * 15% = 1350.

Step 2: Calculate the tax for the amount over 9000Charliemade9000 Charlie made 40,000 last year, so the amount of his income over 9000is9000 is 40,000 - 9000=9000 = 31,000. The tax rate for this portion of his income is 17%, so Charlie's tax for this portion is 31,0001731,000 * 17% = 5270.

Step 3: Add up the tax from step 1 and step 2 Charlie's total tax for last year is 1350(fromstep1)+1350 (from step 1) + 5270 (from step 2) = $6620.

So, Charlie must pay $6620 in income tax for last year.

This problem has been solved

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