Tax Rate Comparison for Geoffrey
What is a tax rate?
What is the definition of a tax rate?
Which statement is correct for Geoffrey's tax bill comparison?
a. He would pay approximately $350 more under plan b.
b. He would pay approximately $1,925 more under plan b.
c. He would pay approximately $5,700 more under plan a.
d. He would pay approximately $4,900 more under plan a.
Based on the tax rates for each plan, Geoffrey would pay approximately $350 more under plan B.
A tax rate is a set rate at which tax is charged on income.
Amount of tax Geoffrey will pay under Plan A:
$98,000 = $10,000 + $85,000 + $3,000
5% of $10,000 = $500
10% of $85,000 = $8,500
15% of $3,000 = $450
Total tax = $9,450
Amount of tax Geoffrey will pay under Plan B:
10% of $98,000 = $9,800
Difference between Plan B and Plan A = $350
Therefore, Geoffrey would pay approximately $350 more under plan B