During the current year, K's taxable income is $95,000 and they pay income tax of $16,213. K is single, has no dependents, and does not itemize their deductions, J, who files in exactly the same manner as K, has taxable income of $96,000 and pays income tax of $16,446.
If required, round your answers to four decimal places before converting to a percentage. For example, .3483914 would be rounded to .3464 and entered as 34.34%.
1. What is K's average tax rate?
2. What is J's average tax rate?
3. If K's income increased to the same amount as J, what would K's marginal tax rate be (i.e., what tax rate is paid on the additional $1,000 of income)?