Question

A taxpayer has $95,000 of taxable income for 2020. Indicate the marginal tax rate and calculate the tax if the taxpayer is a

a.​Single individual

b.​Married couple filing jointly

Answer 1

Answer:

Calculations of Tax :

a) Single individual

10% Bracket: ($9,875 - $0) x 10% = $987.50

12% Bracket: ($40,125 - $9,875) x 12% = $3,630.00

22% Bracket: ($85,525 - $40,125) x 22% = $9,988.00

24% Bracket: ($95,000 - $85,525) x 24% = $9,475.00

Total tax liability = $24,080

b) Married couple filing jointly

10% Bracket: ($19,750 - $0) x 10% = $1975

12% Bracket: ($80,250 - $19,750) x 12% = $7260

22% Bracket: ($95,000 - $80,250) x 22% = $3245

Total tax liability = 12,480

Definition and tax rate table:

A marginal tax rate is the rate at which tax is incurred on an additional dollar of income. In the United States, the federal marginal tax rate for an individual increases as income rises. This method of taxation, known as progressive taxation, aims to tax individuals based upon their earnings, with low-income earners being taxed at a lower rate than higher-income earners.

The table below shows the rates and income levels for three types of filer in 2020: single, married filing jointly and heads of household.

Rate	For Singles With Taxable Income Over	For Married Filing Jointly With Taxable Income Over	For Heads of Household With Taxable Income Over
10%	$0	$0	$0
12%	$9,875	$19,750	$14,100
22%	$40,125	$80,250	$53,700
24%	$85,525	$171,050	$85,500
32%	$163,300	$326,600	$163,300
35%	$207,350	$414,700	$207,350
37%	$518,400	$622,050	$518,400