Mrs. Jones has a taxable income of $18,400 and pays tax at a rate of 20%. How much is her income tax?

• A. $2,000
• B. $2,500
• C. $3,680
• D. $4,000

Answer: (C)

To calculate Mrs. Jones' income tax based on her taxable income and tax rate, you can multiply her taxable income by the tax rate.

Mrs. Jones has a taxable income of $18,400 and a tax rate of 20%. To find the tax amount, you perform the following calculation:

Income Tax = Taxable Income × Tax Rate

So,

Income Tax = $18,400 × 0.20 = $3,680.

This calculation demonstrates that the income tax she must pay is indeed $3,680, which corresponds to her taxable income of $18,400 taxed at the 20% rate. Understanding this formula helps clarify how to compute income tax based on different levels of income and tax rates, applying the principle of percentage calculations effectively.