A man's income is increased by 1200 at the same time the tax rate is reduced from 12% to 10% he now pays the same amount of tax as before. what is his increased income if20% of his incomeis exempted from tax in both case
Answers
Let us consider previous salary as a 'X' then
0.12*X=0.10*(X+1200)
0.02X=120
X=120/.02=6000
X=6000
His previous salaray was 6000
A MAN'S SALARY IS INCREASED BY 1200 ,TAX IS DECREASED FROM 12% TO 10% BUT HE PAYS SAME AMOUNT..
Given:
The person's income is increased by 1200.
His tax rate is reduced from 12% to 10%.
He pays the amount of tax as before.
His 20% of income is exempted from tax.
To Find:
His increased income.
Define x:
Let x be his income after the 20% exemption, before the increase
Before increase:
tax = 12% of x
tax = 0.12x
After increase:
Income = x + 1200
Tax = 10% of (x + 1200)
Tax = 0.1(x + 1200)
Solve x:
0.12x = 0.1(x + 1200)
0.12x = 0.1x + 120
0.02x = 120
x = 6000
Find his income before 20% exemption:
80% = 6000
100% = 6000/80 x 100
100% = 7500
Find his increased income:
Increased income = 7500 + 1200
Increased income = 8700
Answer: His increased income is 8700