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    Solve: Calculating Taxable Income

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    Suppose you currently earn taxable income of $100,000 per year. You are subject to an MTR of 50%. Currently, your ATR is 35 percent. Calculate your annual tax. Calculate the extra tax that you would pay per year if your annual income increased to $110,00. What is your ATR when your annual income is $110,000?

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    The annual tax = Income X Average Tax Rate (ATR)
    Annual tax = 100,000 X 35% = $35,000
    The extra tax would be paid based on marginal tax rate ...

    Solution Summary

    Solution provides steps necessary to calculate the taxable income.