Tax Brackets

January 26, 2021

My W-2 form came in the mail a few days ago, so a task about taxes is appropriate. Given the following tax brackets:

income cap    tax rate
  $ 10,000        0%
  $ 30,000       10%
  $100,000       25%
    more         40%

Calculate the amount of tax given an amount of income. The tax brackets work like this: If your income is less than $10,000, your tax is $0. If your income is between $10,000 and $30,000, your tax is 10% of your income in excess of $10,000. If your income is between $30,000 and $100,000, your tax is 10% of the $20,000 of income between $10,000 and $30,000 (or $2,000) plus 25% of your income over $30,000. If your income is over $100,000, your tax is 10% of the $20,000 of income between $10,000 and $30,000 (or $2,000), plus 25% of your income between $30,000 and $100,000 (or $17,500), plus 40% of your income over $100,000 (ouch!).

For example, if your income is $123,456, your tax is $2,000 plus $17,500 plus 40% of $23,456 (or $9,382.40), a total tax of $28,882.40, or 23.4% of your income.

Your task is to write a program that calculates the amount of tax due for a given amount of income. When you are finished, you are welcome to read or run a suggested solution, or to post your own solution or discuss the exercise in the comments below.

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5 Responses to “Tax Brackets”

  1. James Smith said

    Perl

    sub tax {
      return ( ( $_[0] >= 10_000  ? 2*($_[0]-10_000)  : 0 ) 
             + ( $_[0] >= 30_000  ? 3*($_[0]-30_000)  : 0 ) 
             + ( $_[0] >= 100_000 ? 3*($_[0]-100_000) : 0 )
             ) / 20; 
    }
    
  2. James Smith said

    Forgot to say – the trick here is to only add the additional tax per bracket – so about 10K is 10%, above 30K is then (25-10)% = 15% and about 100K is then (40-25)% = 15% as well…

  3. Kevin said

    A solution in Racket:

    (define (taxbrk in (brk '(100000 30000 10000 0)) (tax '(0.40 0.25 0.10 0)) (out 0))
      (cond
        ((zero? in) (display (real->decimal-string out)))
        ((> in (car brk)) (taxbrk (car brk) (cdr brk) (cdr tax) (+ out (* (car tax) (- in (car brk))))))
        (else (taxbrk in (cdr brk) (cdr tax) out))))
    

    Solution in use:

    > (taxbrk 123456)
    28882.40
    > (taxbrk 0)
    0.00
    > (taxbrk 10000)
    0.00
    > (taxbrk 30000)
    2000.00
    > (taxbrk 100000)
    19500.00
    > (taxbrk 100200)
    19580.00
    
  4. Daniel said

    Here’s a solution in Python.

    from decimal import Decimal
    
    def tax(income):
        output = Decimal(0)
        for threshold, rate in (100_000, '.40'), (30_000, '.25'), (10_000, '.10'):
            if income >= threshold:
                output += Decimal(rate) * (income - threshold)
                income = threshold
        return output
    
    print(tax(123_456))
    

    Output:

    28882.40
    
  5. cagisw said

    Solution in Java:

    public class TaxBrackets {
    
    	public static void main(String[] args) {
    
    		double income = 123456;
    		double calculateTax = calculateTax(income);
    		System.out.println(calculateTax);
    	}
    
    	private static double calculateTax(double income) {
    		double totalTax = 0;
    		double import1 = 10000;
    		double import2 = 30000;
    		double import3 = 100000;
    		
    		if (income <= import1) {
    			return totalTax;
    		}
    		
    		if (income > import1 && income <= import2) {
    			income = income - import1;
    			totalTax = (income * 10) / 100;
    			return totalTax;
    		}
    		
    		if (income > import2 && income <= import3) {
    			income = income - import2;
    			totalTax = ((income * 25) / 100) + 2000;
    			return totalTax;
    		}
    		
    		if (income > import3) {
    			income = income - import3;
    			totalTax = ((income * 40) / 100) + 2000 + 17500;
    			return totalTax;
    		}
    		
    		return totalTax;
    	}
    

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