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gewusel gewusel
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6 years ago
Use the 2010 federal income tax brackets and rates listed below to answer the following question.

Taxable Income
(income tax brackets)   Tax rates   
$40 970 or less   15% of taxable income less than or equal to $40 970; plus
$40 970 to $81 941   22% of taxable income greater than $40 970 and less than or equal to $91 941;    plus
$81 941 to $127 02   26% of taxable income greater than $81 941 and less than or equal to $127 021;    plus
Over $127 021   29% of taxable income greater than $127 021
In early 2010, Juan's gross pay increased from $35 000 per year to $43 000 per year.

a) What was the annual percent increase in Juan's pay before federal income taxes?
b) What was the annual percent increase in Juan's pay after federal income taxes were deducted?
Textbook 
Contemporary Business Mathematics with Canadian Applications

Contemporary Business Mathematics with Canadian Applications


Edition: 11th
Authors:
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wrote...
6 years ago
a)   Increase in gross pay = 43 000 - 35 000 = $8 000
   Percent increase =  (100%) = 22.8571%
b)    Federal tax on $35 000 is 15% of $35000    $5 250
   Net pay after federal tax = 35000 - 5250 = 29 750
   Federal tax on 43 000
      On first $40970   $6145.50
      On excess 22% of 2030      446.60
         $6 592.10
   Net pay after federal tax = $43 000 - $6592.10 = $36 407.90
   Increase in net pay after federal tax = 36 407.90 - 29 750 = 6 657.90
   Percent increase =  (100%) = 22.3795%
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