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311 ch2b

# 311 ch2b - Death and Taxes(ok no death Chapter 2A Average...

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Death and Taxes (ok, no death) Chapter 2A

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Average vs. Marginal Rates Average tax rate = Marginal tax rate = Taxes paid on next dollar of income Income   Total Taxes   Total
Corporate Tax Rates Taxable Income Marginal Tax Rate Tax Calculation Up to \$50,000 15% \$0+15%x(amount over \$0) \$50,001 - \$75,000 25% \$7,500+25%x(amount over \$50,000) \$75,001 - \$100,000 34% \$13,750+34%x(amount over \$75,000) \$100,001 - \$335,000 39% \$22,250+39%x(amount over \$100,000) \$335,001 - \$10,000,000 34% \$113,900+34%x(amount over \$335,000) \$10,000,001 - \$15,000,000 35% \$3,400,000+35%x(amount over \$10,000,000) \$15,000,001 - \$18,333,333 38% \$5,150,000+38%x(amount over \$15,000,000) Over \$18,333,333 35% 35% x Taxable Income

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Average Tax Rates (< \$350,000) 0% 5% 10% 15% 20% 25% 30% 35% 40% 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 100,000 110,000 120,000 130,000 140,000 150,000 160,000 170,000 180,000 190,000 200,000 210,000 220,000 230,000 240,000 250,000 260,000 270,000 280,000 290,000 300,000 310,000 320,000 330,000 340,000 350,000 Taxable Income Average Tax Rate 34%
Average Tax Rates (> \$1,000,000) 30% 32% 34% 36% 38% 40% 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000 8,000,000 9,000,000 10,000,000 11,000,000 12,000,000 13,000,000 14,000,000 15,000,000 16,000,000 17,000,000 18,000,000 19,000,000 20,000,000 Taxable Income Average Tax Rate

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Example Orangeville, Inc. has taxable income of \$225,000. What is the firm’s total taxes? What is the average tax rate? What is the marginal tax rate?
Special features of the tax code Dividend Income 70% of dividend income received by a corporation is excluded from federal income taxes, i.e., not even included as income for

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311 ch2b - Death and Taxes(ok no death Chapter 2A Average...

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