Last visit was: 03 Sep 2026, 15:06 It is currently 03 Sep 2026, 15:06
Home
Messages
Tests
Schools
Events
Close
GMAT Club Daily Prep
Thank you for using the timer - this advanced tool can estimate your performance and suggest more practice questions. We have subscribed you to Daily Prep Questions via email.

Customized
for You

we will pick new questions that match your level based on your Timer History

Track
Your Progress

every week, we’ll send you an estimated GMAT score based on your performance

Practice
Pays

we will pick new questions that match your level based on your Timer History
Not interested in getting valuable practice questions and articles delivered to your email? No problem, unsubscribe here.
Go to My Error Log Learn more
Close
Request Expert Reply
Confirm Cancel
Back to Forum
Create Topic
User avatar
kevincan
User avatar
GMAT Instructor
Joined: 04 Jul 2006
Last visit: 03 Sep 2026
Posts: 2,462
Own Kudos:
4,868
Given Kudos: 449
GMAT 1: 790 Q51 V51
GRE 1: Q170 V170
Expert
Expert reply
Active GMAT Club Expert! Tag them with @ followed by their username for a faster response.
GMAT 1: 790 Q51 V51
GRE 1: Q170 V170
Posts: 2,462
Kudos: 4,868
In Chloes country, annual personal income is tax 30 Aug 2026, 19:08
Kudos
Add Kudos
Bookmarks
Bookmark this Post
00:00
Start Timer
Pause Timer
Resume Timer
Show Answer
Hide
Show
History
E
Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!

Difficulty:

45% (medium)

Question Stats:

78% (02:36) correct 22% (03:12) wrong based on 58 sessions

History

Date
Time
Result
Not Attempted Yet
In Chloe’s country, the first n euros of annual income are exempt from tax, and any income above n euros is taxed at 40%. Under a proposed system, the first €25,000 of annual income would be exempt from tax, and any income above €25,000 would be taxed at 50%. Chloe, who has annual income of €65,000, would pay the same amount of tax under the proposed system as she does now.

How much tax does a person with an annual income of €50,000 currently pay in this country?

(A) €11,000
(B) €12,000
(C) €12,500
(D) €13,000
(E) €14,000
ShowHide Answer
Official Answer
E
User avatar
paragw
User avatar
Joined: 17 May 2024
Last visit: 03 Sep 2026
Posts: 374
Own Kudos:
380
Given Kudos: 62
Posts: 374
Kudos: 380
In Chloes country, annual personal income is tax 30 Aug 2026, 20:59
Kudos
Add Kudos
Bookmarks
Bookmark this Post
(40/100)(65k - n) = (65k - 25k)/2
n = 15k
Tax = (40/100)(50k - 15k) = 14k
Hence, E
User avatar
kevincan
User avatar
GMAT Instructor
Joined: 04 Jul 2006
Last visit: 03 Sep 2026
Posts: 2,462
Own Kudos:
4,868
Given Kudos: 449
GMAT 1: 790 Q51 V51
GRE 1: Q170 V170
Expert
Expert reply
Active GMAT Club Expert! Tag them with @ followed by their username for a faster response.
GMAT 1: 790 Q51 V51
GRE 1: Q170 V170
Posts: 2,462
Kudos: 4,868
In Chloes country, annual personal income is tax 31 Aug 2026, 08:59
Kudos
Add Kudos
Bookmarks
Bookmark this Post
The nice thing is that we don’t need to find n
User avatar
TearMoss
User avatar
Joined: 27 Jul 2026
Last visit: 03 Sep 2026
Posts: 1
Given Kudos: 31
Posts: 1
Kudos: 0
In Chloes country, annual personal income is tax 31 Aug 2026, 09:37
Kudos
Add Kudos
Bookmarks
Bookmark this Post
Turns out, we do not need to find n which is what I struggled with for a minute or two :)

If Chloe is paying the same amount as tax in both tax systems, then we can form an equation.
In the new system, any income above €25,000 is taxed. With an income of €65,000, she would have to pay a tax of 50% on €40,000.
If she was paying the same amount in the current system, let us consider that € x of her income is taxable.

-> 40,000 * 0.5 = x * 0.4
-> x = 50,000

Which means that in the current system, she is paying tax on €50,000. So, €15,000 is the limit exempt from any tax.
For a person with an annual income of €50,000, the taxable income would be €35,000. With a tax rate of 40%:
Total tax paid: 35,000 * 0.4 = 14,000

Hence, answer is option E.
User avatar
kevincan
User avatar
GMAT Instructor
Joined: 04 Jul 2006
Last visit: 03 Sep 2026
Posts: 2,462
Own Kudos:
4,868
Given Kudos: 449
GMAT 1: 790 Q51 V51
GRE 1: Q170 V170
Expert
Expert reply
Active GMAT Club Expert! Tag them with @ followed by their username for a faster response.
GMAT 1: 790 Q51 V51
GRE 1: Q170 V170
Posts: 2,462
Kudos: 4,868
In Chloes country, annual personal income is tax 31 Aug 2026, 21:24
Kudos
Add Kudos
Bookmarks
Bookmark this Post
Under the proposed system Chloe would pay 0.5(65-25)=20 thousand dollars, and this is also what she actually pays. Somebody who earns 50 thousand will pay 0.4(65-50) =6 thousand less than Chloe

14,000
kevincan
In Chloe’s country, the first n euros of annual income are exempt from tax, and any income above n euros is taxed at 40%. Under a proposed system, the first €25,000 of annual income would be exempt from tax, and any income above €25,000 would be taxed at 50%. Chloe, who has annual income of €65,000, would pay the same amount of tax under the proposed system as she does now.

How much tax does a person with an annual income of €50,000 currently pay in this country?

(A) €11,000
(B) €12,000
(C) €12,500
(D) €13,000
(E) €14,000
Show more
Moderator:
Bunuel
Math Expert
113098 posts