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# Your income for a year is \$26,000. You receive a raise so that next ye

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Math Expert
Joined: 02 Sep 2009
Posts: 50627

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24 Oct 2017, 00:29
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Difficulty:

15% (low)

Question Stats:

95% (01:38) correct 5% (01:29) wrong based on 57 sessions

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Your income for a year is \$26,000. You receive a raise so that next year your income will be \$29,000. How much more will you pay in taxes next year if the tax rate remains the same?

(A) \$70
(B) \$180
(C) \$200
(D) \$210
(E) \$700

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Posts: 244
Concentration: Strategy, Finance
GMAT 1: 620 Q46 V29
Re: Your income for a year is \$26,000. You receive a raise so that next ye  [#permalink]

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24 Oct 2017, 04:45
1070+7%*4000-1070-7%*1000=210\$
Target Test Prep Representative
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Re: Your income for a year is \$26,000. You receive a raise so that next ye  [#permalink]

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26 Oct 2017, 14:43
Bunuel wrote:

Your income for a year is \$26,000. You receive a raise so that next year your income will be \$29,000. How much more will you pay in taxes next year if the tax rate remains the same?

(A) \$70
(B) \$180
(C) \$200
(D) \$210
(E) \$700

The difference in taxes is:

[1,070 + 0.07(29,000 - 25,000)] - [1,070 + 0.07(26,000 - 25,000)]

0.07(4,000) - 0.07(1,000)

0.07(3,000) = 210

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27 Oct 2017, 15:47
Bunuel wrote:

Your income for a year is \$26,000. You receive a raise so that next year your income will be \$29,000. How much more will you pay in taxes next year if the tax rate remains the same?

(A) \$70
(B) \$180
(C) \$200
(D) \$210
(E) \$700

At both \$26K and \$29K, you are in the same tax bracket. You will pay the same flat fee of \$1070. Ignore that flat fee. Adding in the same amount will not make a difference.

The difference comes from the second part of tax calculation: you pay 7 percent of any income that exceeds \$25,000

At \$26,000, you exceed by \$1000.
So you pay (1000)(.07) = \$70

At \$29,000, you exceed by \$4,000.
So you pay (4000)(.07) = \$280

How much more do you pay if you get a raise?

\$280 - 70 = \$210
Your income for a year is \$26,000. You receive a raise so that next ye &nbs [#permalink] 27 Oct 2017, 15:47
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