Under Hypothetical Tax Code 2, the tax rate on the first $30,000 of taxable income is 15% and the tax rate on any additional income is 25%. Another way to explain these rates is as follows:

• For taxable income from $0 to $30,000, you pay 15% of your taxable income in taxes, plus
• For taxable income above $30,000, you pay 25% of your taxable income.

Remember that there is a difference between total income (i.e., your salary from your employer plus other money you earn) and taxable income (your total income minus your deductions and your personal exemptions). Throughout these exercises, assume that you use the standard deduction. Please use the values given in the background information for those quantities.

• The following assume a total income of $50,000 under Hypothetical Tax code 2.
  • With a total income of $50,000 what would be your taxable income?

• Of the taxable income calculated above, how much of it would be taxed at 15%? How much of it would be taxed at 25%?

standard deduction is 14600