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Income tax rates and calculation of taxes

Income Taxes

Income tax rates and calculation of taxes

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Corporate federal tax rates are subject to change by the U. S. Congress. Below is the table of tax rates at the time of this writing. Current rates may be obtained from the IRS.

Taxable income

(TI) in $

Federal Tax

Rate (%)


Federal Tax ($)

< 50,000

15

(15%)(TI)

50,000 - 75,000

25

7,500 + (25%)(TI - 50,000)

75,000 - 100,000

34

13,750 + (34%)(TI - 75,000)

100,000 - 335,000

39

22,250 + (39%)(TI - 100,000)

335,000 - 10 million

34

113,900 + (34%)(TI - 335,000)

10 million - 15 million

35

3,400,000 + (35%)(TI - 10 million)

15 million - 18,333,333

38

5,159,000 + (38%)(TI - 15 million)

> 18,333,333

35

6,425,667 + (35%)(TI - 18,333,333)

Businesses are also subject to state income tax.

Example:

A corporation had taxable income of $500,000 in a year. Calculate the federal income tax for the year.

Tax = $113,900 + (34%)($500,000 - $335,000) = $170,000

Income Taxes

Income tax rates and calculation of taxes

Question 1

Question 2

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Question 1.

Calculate the federal income tax for a business that had $11.0 million taxable income for the year of interest. Federal income tax rates are given below.

Taxable income

(TI) in $

Federal Tax

Rate (%)


Federal Tax ($)

< 50,000

15

(15%)(TI)

50,000 - 75,000

25

7,500 + (25%)(TI - 50,000)

75,000 - 100,000

34

13,750 + (34%)(TI - 75,000)

100,000 - 335,000

39

22,250 + (39%)(TI - 100,000)

335,000 - 10 million

34

113,900 + (34%)(TI - 335,000)

10 million - 15 million

35

3,400,000 + (35%)(TI - 10 million)

15 million - 18,333,333

38

5,159,000 + (38%)(TI - 15 million)

> 18,333,333

35

6,425,667 + (35%)(TI - 18,333,333)

Choose an answer by clicking on one of the letters below, or click on "Review topic" if needed.

A $3,400,000

B $3,740,000

C $3,750,000

D $11,000,000

Review topic

Question 2.

Calculate the combined federal and state income taxes for a business that is subject to a California state income tax of 8.84%. Federal income tax rates are given below. The company's taxable income for the year of interest is $11.0 million.

Taxable income

(TI) in $

Federal Tax

Rate (%)


Federal Tax ($)

< 50,000

15

(15%)(TI)

50,000 - 75,000

25

7,500 + (25%)(TI - 50,000)

75,000 - 100,000

34

13,750 + (34%)(TI - 75,000)

100,000 - 335,000

39

22,250 + (39%)(TI - 100,000)

335,000 - 10 million

34

113,900 + (34%)(TI - 335,000)

10 million - 15 million

35

3,400,000 + (35%)(TI - 10 million)

15 million - 18,333,333

38

5,159,000 + (38%)(TI - 15 million)

> 18,333,333

35

6,425,667 + (35%)(TI - 18,333,333)

Choose an answer by clicking on one of the letters below, or click on "Review topic" if needed.

A $972,400

B $3,750,000

C $4,722,400

D $4,822,400

Review topic



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