Abby lives in a state in which the state income tax rate is equal to 5.38% of federal taxable income. Abby’s federal income tax is equal to 19.6% of her federal taxable income. If Abby owes $8,880.17 in federal income tax, how much does she owe in state income tax?

First find Abby’s federal taxable income: $8,880.17 ÷ 0.196 ≈ $45,307. Those same taxable dollars are taxed at 5.38% by the state, so $45,307 × 0.0538 ≈ $2,437.52. Abby owes $2,437.52 in state income tax, which is choice D.

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