To determine Steve's income tax bracket, we need to follow a series of steps. Let's break it down step-by-step:
1. Determine Steve's gross income:
[tex]\( \$ 86,100 \)[/tex]
2. Calculate the total deductions:
- Standard deduction: [tex]\( \$ 5700 \)[/tex]
- Personal exemption for himself: [tex]\( \$ 3650 \)[/tex]
3. Compute the total deductions:
[tex]\[
5700 + 3650 = 9350 \text{ dollars}
\][/tex]
4. Calculate the taxable income by subtracting the total deductions from the gross income:
[tex]\[
86100 - 9350 = 76750 \text{ dollars}
\][/tex]
5. Determine the tax bracket by comparing the taxable income to the provided tax bracket table:
- Taxable income over [tex]\( \$ 0 \)[/tex] but not over [tex]\( \$ 8350 \)[/tex] → 10%
- Taxable income over [tex]\( \$ 8350 \)[/tex] but not over [tex]\( \$ 33950 \)[/tex] → 15%
- Taxable income over [tex]\( \$ 33950 \)[/tex] but not over [tex]\( \$ 82250 \)[/tex] → 25%
- Taxable income over [tex]\( \$ 82250 \)[/tex] but not over [tex]\( \$ 171550 \)[/tex] → 28%
- Taxable income over [tex]\( \$ 171550 \)[/tex] but not over [tex]\( \$ 372950 \)[/tex] → 33%
- Taxable income [tex]\( \$ 372950+ \)[/tex] → 35%
Steve's taxable income is [tex]\( 76750 \)[/tex] dollars, which falls within the range [tex]\( 33950 \)[/tex] to [tex]\( 82250 \)[/tex] dollars.
Therefore, Steve falls into the 25% tax bracket.
