In the year 2000 a couple with two small children has combin

In the year 2000, a couple with two small children has combined salaries of $125,468; dividend and interest income of $2,666; and capital gains income of $8,540. Since they do not have substantial deductions, they plan on taking the standard deduction of $7,400. The personal exemption is $3,000. The couple is filing their return under the status of “Married - filing jointly.” The state has a flat tax rate of 6% of the taxable income. Calculate their net income after taxes and the percentage of their gross income they will pay in taxes.

Solution

Total Income = 125468+2666+8540

total income = 136674

Income after exemption = 136674-10400 = 126274

total tax = 6% of 126274= 7576.44

Net Income after tax = 136674-7576.44 = 129097.56

Percentage of tax on gross income = tax/gross income*100 = 7576.44/136674*100 = 5.54%