Answer: 17.56%
Explanation:
Given that,
Leonardo taxable income = $90,000
Tulsa bonds = $8,750
Theresa taxable income = $50,000
Computation of Leonardo's Tax:
According to the tax rate schedule,
Total Tax = Tax + 24% of taxable income over $82,500
= $14,089.50 + 24% × $7,500
= $14,089.50 + $1,800
= $15,889.5
Computation of Theresa's Tax:
According to the tax rate schedule,
Total Tax = Tax + 22% of taxable income over $38,700
= $4453.50 + 22% × $11,300
= $4453.50 + $2,486
= $6939.5
Total tax on Leonardo's income and Theresa's income:
= $15,889.5 + $6939.5
= $22,829
Effective tax rate = ![\frac{Total\ Tax}{Total\ Taxable\ Income}\times100](https://tex.z-dn.net/?f=%5Cfrac%7BTotal%5C%20Tax%7D%7BTotal%5C%20Taxable%5C%20Income%7D%5Ctimes100)
= ![\frac{22,829}{130,000}\times100](https://tex.z-dn.net/?f=%5Cfrac%7B22%2C829%7D%7B130%2C000%7D%5Ctimes100)
= 17.56%