Question

chuck, a single taxpayer, earns $77,250 in taxable income and $12,100 in interest from an investment in city of heflin bonds. (use the u.s. tax rate schedule.) required: if chuck earns an additional $40,000 of taxable income, what is his marginal tax rate on this income? what is his marginal rate if, instead, he had $40,000 of additional deductions? (for all requirements, do not round intermediate calculations. round percentage answers to 2 decimal places.)

Answer 1

a) Chuck's marginal tax rate when his taxable income is $117,250 is 24%.

b) Chuck's marginal tax rate when his taxable income is $37,250 is 12%.

What is the marginal tax rate?

The marginal tax rate is the change in the taxpayer's payment divided by the change in the taxable income.

The marginal tax rate is the rate paid for additional income.

For Chuck, the additional income he earns above $40,525, which is taxed at 12% is taxed at 24%.  But when his taxable income is less than $40,525, his marginal tax rate is 12%.

Data and Calculations:

Taxable income = $77,250

Interest from city bonds = $12,100

Additional tax income or deduction = $40,000

Total taxable income with additional tax income = $117,250 ($77,250 + $40,000)

Total taxable income with additional deductions = $37,250 ($77,250 - $40,000).

Thus, Chuk's marginal tax rate is higher with the additional taxable income of $40,000 than when the $40,000 is additional deductions.

Learn more about the marginal tax rate at brainly.com/question/14145043

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