Jamie has taxable income of $45,000. She is single and her tax rates are 10% on the first $9,075 of taxable income, 15% of the amount over $9,075 up to $36,900 of taxable income and 25% on the remainder. What are Jamie's tax liability, marginal tax rate, and average tax rate? (Show all work.)
Tax liability = 10% × $9,075 + 15% × ($36,900 - $9,075 ) + 25% × ($45,000 - $36,900 ) = $908 + $4,173 + $2,025 = $7,107
Marginal tax rate = 25%
Average tax rate = $7,107 ÷ $45,000 = 0.1579 or 15.79%
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