Question

Marc,a single taxpayer, earns $191,000 in taxable income and $5,900 in interest from an investment in city of Birmingham bonds. Using the U.S. tax rate schedule for year 2019, what is his current marginal tax rate? (Use Tax rate schedule)

Answer 1

Answer:

Provision:

As per US tax rate schedule, 2019

For a single tax payer whose Taxable income is over $ 160,725 but not over $ 204,100 the tax shall be

= $32,748 {+} 32% of the amount over $160,725

So, to calculate the tax liability:

Taxable income of Marc = $ 191,000

= $ 32,748 + 32% x ($191,000 - $160,725)

= $ 32,748 + $ 9,688

= $ 42,436

Tax rate calculation = Tax liability / Total income (Including interest)

= { $ 42,436 / ($ 191,000 + $ 5,900) } x 100

= 21.55%

Current marginal tax rate = 21.55%

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