Question

Campbell, a single taxpayer, earns $302,000 in taxable income and $6,800 in interest from an investment in State of New York bonds. (Use the U.S. tax rate schedule). Required: a. If Campbell earns an additional $21,000 of taxable income, what is her marginalta rate on this income? b. What is her marginal rate if, instead, she had $21,000 of additional deductions? (For all requirements, do not round intermediate calculations.) 35 % a. b. Marginal tax rate Marginal tax rate

Answer 1

Tax on $302000	80893.5	=46628.5+(302000-204100)*35%
a
Taxable income	323000	=302000+21000
Tax on $323000	88243.5	=46628.5+(323000-204100)*35%
Marginal tax rate	35%	=(88243.5-80893.5)/21000
b
Taxable income	281000	=302000-21000
Tax on $281000	73543.5	=46628.5+(281000-204100)*35%
Marginal tax rate	35%	=(80893.5-73543.5)/21000