Tammy earns $40,000 gross annual salary. In Tammy's jurisdiction there is a progressive tax system with rules as follows:Any amounts earned up to $x are free from income tax.Any amounts earned beyond $x are taxed at 25%.Given that Tammy pays $5,400 per annum in income tax, calculate x. You can assume that x<40,000. Give your answer in dollars to the nearest dollar.

Accepted Solution

Answer:$18,400Step-by-step explanation:We need to find what amount's 25% is 5400??Let this amount be a, so we can say:a*0.25 = 5400a = 5400/0.25a = 21,600Now40,000 - 21,600 = 18,400Thus for the first 18,400 --- the tax is 0For next 21,600 ---- tax is 25% which is 5400 taxSo amount $18,400 is tax free. x is equal to 18400