To determine the total amount of taxes Ethan owes, we need to apply his taxable income of \[tex]$87,525 to the given tax schedule. Here is the step-by-step breakdown:
1. Identify the applicable tax bracket:
- Ethan's taxable income is \$[/tex]87,525.
- This places him in the bracket: [tex]\(\$77,100\)[/tex] to [tex]\(\$160,850\)[/tex].
2. Calculate the tax owed for the lower brackets:
- For the first \[tex]$7,825, the tax rate is 10%. So:
\[
\$[/tex]7,825 \times 0.10 = \[tex]$782.50
\]
- For the amount between \$[/tex]7,825 and \[tex]$31,850 (which is \$[/tex]24,025), the tax rate is 15%. So:
[tex]\[
\$24,025 \times 0.15 = \$3,603.75
\][/tex]
Adding this to the previous amount:
[tex]\[
\$782.50 + \$3,603.75 = \$4,386.25
\][/tex]
- For the amount between \[tex]$31,850 and \$[/tex]77,100 (which is \[tex]$45,250), the tax rate is 25%. So:
\[
\$[/tex]45,250 \times 0.25 = \[tex]$11,312.50
\]
Adding this to the previous amount:
\[
\$[/tex]4,386.25 + \[tex]$11,312.50 = \$[/tex]15,698.75
\]
3. Calculate the tax owed for the amount within his bracket:
- For the amount above \[tex]$77,100 up to \$[/tex]87,525 (which is \[tex]$10,425), the tax rate is 28%. So:
\[
\$[/tex]10,425 \times 0.28 = \[tex]$2,919.00
\]
Adding this to the previous amount:
\[
\$[/tex]15,698.75 + \[tex]$2,919.00 = \$[/tex]18,617.75
\]
Therefore, the total amount Ethan owes in taxes is \[tex]$18,617.75.
The correct answer is:
B. \$[/tex]18,617.75
