Exam ple: Ma erage Rates Suppose you are single and your personal taxable income is 100,000 What is your tax bill? What is the average tax rate? What is the marginal rate?

To calculate your tax bill, you need to know the tax brackets and rates for the specific year and location you are referring to. For simplicity, let's assume we are in the United States for the tax year 2023. The federal income tax brackets for a single filer are as follows:<br /><br />- 10% on income up to $11,000<br />- 12% on income from $11,001 to $44,725<br />- 22% on income from $44,726 to $95,375<br />- 24% on income from $95,376 to $182,100<br /><br />Let's calculate your tax bill step by step:<br /><br />1. **10% on income up to $11,000:**<br /> \[<br /> 10\% \times \$11,000 = \$1,100<br /> \]<br /><br />2. **12% on income from $11,001 to $44,725:**<br /> \[<br /> 12\% \times (\$44,725 - \$11,000) = 12\% \times \$33,725 = \$4,047<br /> \]<br /><br />3. **22% on income from $44,726 to $95,375:**<br /> \[<br /> 22\% \times (\$95,375 - \$44,725) = 22\% \times \$50,650 = \$11,143<br /> \]<br /><br />4. **24% on income from $95,376 to $100,000:**<br /> \[<br /> 24\% \times (\$100,000 - \$95,376) = 24\% \times \$4,624 = \$1,111.76<br /> \]<br /><br />Now, sum up all the amounts:<br /><br />\[<br />\text{Total Tax Bill} = \$1,100 + \$4,047 + \$11,143 + \$1,111.76 = \$17,401.76<br />\]<br /><br />### Average Tax Rate<br />The average tax rate is the total tax bill divided by the total income:<br /><br />\[<br />\text{Average Tax Rate} = \frac{\text{Total Tax Bill}}{\text{Total Income}} = \frac{\$17,401.76}{\$100,000} = 0.1740 \text{ or } 17.40\%<br />\]<br /><br />### Marginal Tax Rate<br />The marginal tax rate is the rate applied to the last dollar earned. Since the last $5,624 of your income is taxed at 24%, your marginal tax rate is:<br /><br />\[<br />\text{Marginal Tax Rate} = 24\%<br />\]<br /><br />### Summary<br />- **Tax Bill:** \$17,401.76<br />- **Average Tax Rate:** 17.40%<br />- **Marginal Tax Rate:** 24%