Question

2019 Tax Rate Schedules Individuals Schedule X-Single If taxable income is over: But not over: The tax is: 5 0 9.700 10% of taxable income $ 9.700 S 39,475 5970 plus 12% of the excess 59,700 $ 39,475 IS 84200 54,343 plus 22 of the ces $39.473 $ 84,200 $160,725 $14.382.50 plus 24 of the Rosa $84.200 S160725 S204.100 532 748 50 plus 32% of the cere over $160,735 $104 100 S510 300 546 678 50 plus 39 of the P er 5204100 SS10 300 - 5153.798 50 plus 37 of the excess over 5510,300 Schedule Y-1 Married Filing Jointly or Qualifying Widower) If taxable income is over. But not over: The taxis S 0 S 19.400 10% of taxable income S 19.400 STS 950 190 plus 126 of the excess over $19.000 $ 78,950 $168.100 159,056 plus 20 of the excess over $75.950 $168.400 321,450 528,765 plus 24% of the excess over $168.400 $321,450 S408,200 $63,49% plus 32% of the $21.450 $408.200 9612 350) 1899.257 ulu 35% of the $408.200 $612,350 - $164 709 50 plus 37% of the excess over $612.950 Schedule Z Ilead of Ilousehold If taxable income is over. But not over: Thesis: S 0 S 13.850 10 of table income S 11.850 S 52.850 51 385 plus 12% of the excess over $12.850 S52.850 S 84.20056085 plus 22% of the excess over 552,850 S S1200 $160, 700 $12.962 ples 20% of the ressorer $84.200 $160.700 520 1.100 531,322 plus 32% of the excess ever $150,700 $201.100 SS10,300 545,210 plus 35% of the excess over $204,100 510 300 - 152,380 pius 37 of the excess N 5510,300 Schedule Y-2. Married Filing Separately taxable income is over: But motorer: The taxis 5 0 5 9.700 10% of taxable income S 9.700 S 39,415 5970 plus 12% of the excess ova 59,700 $ 39475 S 84200 54 549 plus 22 of the core VG 599,475 S 84.00 $160 75 514 38250 per 24 of the excres 584 200 $160,725 S204 100 532 748 50 plus 32% of the excess over $160,725 S204 100 $306 275516 528 50 plus 35 of the excess over 5204,100 $306,175 - 582,351.75 plus 37% of the excess over 5305,178

Answer 1

a. If Campbell earns an additional $21,000 of taxable income, what is her marginal tax rate on this income?
Using 2019 tax Schedule
Taxable Income (old)	302000
$46,628.50 plus 35% of the amount over $204,100
Cambell will owe (old Tax)= $46,628.50 + 35%*($302,000 - $204100)	80893.5
Marginal tax rate = New tax - Old tax/(New Taxable Income - Old Taxable income)
New Taxable Income = ($302000 + $21000)	323000
New Tax = $46,628.50 + 35%*($323,000 - $204100)	88243.5
Marginal tax rate = ($88243.50 - $80893.50)/($323000 - $302000)	35.00%
b) What is her marginal rate if instead she had $21000 of additional deduction?
Using 2019 tax Schedule
Taxable Income (old)	302000
$46,628.50 plus 35% of the amount over $204,100
Cambell will owe (old Tax)= $46,628.50 + 35%*($302,000 - $204100)	80893.5
Marginal tax rate = New tax - Old tax/(New Taxable Income - Old Taxable income)
New Taxable Income = ($302000 - $21000)	281000
New Tax = $46,628.50 + 35%*($281,000 - $204100)	73543.5
Marginal tax rate = ($73543.5 - $80893.50)/($281000 - $302000)	35.00%