Intuit Academy Tax Practice Exam

For taxpayers earning less than $200,000, what tax rate applies to taxable income?

1. 1%

2. 3%

3. 5%

4. 4%

The correct answer is: 4%

For taxpayers earning less than $200,000, the applicable tax rate of 4% is derived from the tax brackets established in the tax code. In many tax systems, different income ranges are taxed at varying rates. In this scenario, the 4% rate usually applies to a specific range of taxable income for individuals within that earnings threshold. This rate reflects a balanced approach aimed at ensuring a manageable tax burden for lower to middle-income earners, promoting equity in the taxation system. It also provides a straightforward understanding of the tax obligations for those within this income bracket. While other rates such as 1%, 3%, and 5% may also exist within the broader tax structure, they typically correspond to different income ranges or conditions. In contrast, the 4% rate specifically applies to the taxable income of individuals earning less than $200,000, making it the correct choice in this context. Understanding the delineation of these rates is essential for accurate tax planning and compliance.