Answer :
With taxable income of $86000 and paid tax $18000 the average tax rate of the person would be 21%. ($86000 ÷ $18000 × 100)
More about taxable income:
Both earned and unearned income are included in taxable income. For purposes of calculating taxable unearned income, cancelled debts, government benefits, etc. are included. Earnings from appreciated assets that were sold during the year, as well as dividend and interest income, are also included in the definition of taxable income.
The percentage of taxes subtracted from taxable income is the average tax rate. People pay varying percentages of tax because of the progressive nature of the U.S. tax system. They can determine the total amount of tax paid by using the average tax rate.
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