Question

Jorge and Anita, married taxpayers, earn $96,500 in taxable income and $77,500 in interest from an investment in City of Heflin bonds. Using the U.S. tax rate schedule for married filing jointly, how much federal tax will they owe? What is their average tax rate? What is their effective tax rate? What is their current marginal tax rate? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Federal tax Average tax rate Effective tax rate Marginal tax rate de

Answer 1

The income from interest from investment in City of Heflin bonds is exempt income.

Range	Tax rate	Federal tax
0 to 19400	10%	1940
19400 to 78950	12%	7146
78950 to 96500	22%	3861
		12947

Jorge and Anita will owe $12,947 in federal income tax this year.

Jorge and Anita average tax rate = total tax/ taxable income = 12,947/96,500 = 13.41%

Jorge and Anita effective tax rate = total tax/effective income = 12,947/(96500+77,500) = 7.44%

Marginal tax rate is a tax rate that is charged on the last dollar earned which is in this case = 22%

The rates are as per IRS 2019 tax schedule married and filing jointly.

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