# What does a person who earns $74500 pay as taxes in the following case:In a progressive income tax system, the tax till $25000 is 10%, it becomes 25% till $50000 and beyond $50000 it is 30%.

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### 2 Answers

The person earns $74500, this can be divided into the three slabs as $25000 in the first, $25000 in the second and we are left with 74500 – 50000 = 24500 in the third.

The tax paid on the first $25000 = 25000* 10% = 2500

The tax paid on the $25000 lying in the next slab is 25000*25% = 6250

The remaining $24500 attracts a tax of 24500* 30% = 7350

The total tax to be paid adds up to 2500 + 6250 + 7350 = 16100

**The total tax to be paid on the income of $74500 is $16100.**

We will divide the income into the three categories.

74,500 = 25,000 + 25,000 + 24,500

The first 25,000, the tax is 10%

==> 10% * 25,000 = 2500

The second 25,000 , the tax is 25%

==> 25% * 25,000 = 6256

The third is 24,500 , the tax is 30%.

==> 30% * 24,500 = 7350

Now we will add all three taxes.

==> 2500 + 6250 + 7350 = 16,100

**Then the person whose income is 74,500 pays taxes of $16,100.**