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

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Bunuel
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Your income for a year is $26,000. You receive a raise so that next ye [#permalink] New post   24 Oct 2017, 01:29
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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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D
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Re: Your income for a year is $26,000. You receive a raise so that next ye [#permalink] New post   24 Oct 2017, 05:45
1070+7%*4000-1070-7%*1000=210$
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Re: Your income for a year is $26,000. You receive a raise so that next ye [#permalink] New post   26 Oct 2017, 15:43
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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

Answer: D
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Your income for a year is $26,000. You receive a raise so that next ye [#permalink] New post   27 Oct 2017, 16:47
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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
Answer D
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Your income for a year is $26,000. You receive a raise so that next ye [#permalink]
27 Oct 2017, 16:47
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