Answer:
Average tax rate rounded to the nearest is 21%
Solution:
Average tax rate is total tax payable divided by the taxable income earned. Marginal tax rate will always be greater than average tax. The tax payable includes all the amount under every single income tax bracket of the individual. The formula for average tax is as follows
[tex]\text {average tax rate}=\frac{\text {taxes payable}}{\text {taxable income}} \times 100[/tex]
Given, tax payable = 18, 000
Taxable income=86,000
[tex]\therefore \text { average tax rate }=\frac{18,000}{86,000} \times 100=20.93 \%[/tex]
The average tax rate is approximately 21%.
