Calculate the monthly income tax paid by the employee.

Question

ScanSolve AI Tutor · Accepted Answer

Thanks for the clearer image, Dalena! Now we can solve the income tax question.

Question 4: Calculate the monthly income tax paid by the employee.

Employee's monthly salary = Ksh 32500
Personal tax relief = Ksh 1056 per month

Calculate the tax for each income bracket.
The tax table is:
- 1 - 9680: 10%
- 9681 - 18500: 15%
- 18501 - 27920: 20%
- 27921 - 37040: 25%
- Over 37040: 30%
- First bracket (Ksh 1 - 9680): Income in this bracket = Ksh $9680 - 1 + 1 = 9680$ Tax = $10\% \text{ of } 9680 = 0.10 \times 9680 = \text{Ksh } 968$
- Second bracket (Ksh 9681 - 18500): Income in this bracket = Ksh $18500 - 9681 + 1 = 8820$ Tax = $15\% \text{ of } 8820 = 0.15 \times 8820 = \text{Ksh } 1323$
- Third bracket (Ksh 18501 - 27920): Income in this bracket = Ksh $27920 - 18501 + 1 = 9420$ Tax = $20\% \text{ of } 9420 = 0.20 \times 9420 = \text{Ksh } 1884$
- Fourth bracket (Ksh 27921 - 37040): The employee's salary is Ksh 32500. The income falling into this bracket is: Income in this bracket = Ksh $32500 - 27921 + 1 = 4580$ Tax = $25\% \text{ of } 4580 = 0.25 \times 4580 = \text{Ksh } 1145$
Calculate the gross tax payable.
Gross tax = Sum of tax from all brackets
$\text{Gross tax} = 968 + 1323 + 1884 + 1145 = \text{Ksh } 5320$
Calculate the net tax paid after relief.
Net tax = Gross tax - Personal tax relief
$\text{Net tax} = 5320 - 1056 = \text{Ksh } 4264$
The monthly income tax paid by the employee is $\text{Ksh } 4264$ .

Answer