Average versus Marginal Tax Rates
 
Average tax rate is the total taxes paid divided by total taxable income.

Marginal tax rate is the amount of tax payable on the next dollar earned.

Table 2.4 summarizes some different taxable incomes, marginal tax rates, and average tax rates for corporations.


                                                                                                                                             Table 2.4

(1)
Taxable Income
(2)
Marginal Tax Rate
(3)
Total Tax
(3)/(1)
Average Tax Rate
$            45,000
   15%
$         6,750
  15.00%
70,000
25
12,500
17.86
95,000
34
20,550
21.63
250,000
39
80,750
32.30
1,000,000
34
340,000
34.00
17,500,000
38
6,100,000
34.86
50,000,000
35
17,500,000
35.00
100,000,000
35
35,000,000
35.00
 
WWW: For the latest tax news and information online, go to the Interanl Revenue Service website at http://www.irs.ustreas.gov/prod/

 
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