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What would be the marginal and average tax rates for a married couple with taxable income...

What would be the marginal and average tax rates for a married couple with taxable income of $90,000? For an unmarried taxpayer with the same income? Use Table 3.7. (Do not round intermediate calculations. Enter the marginal tax rate as a percent rounded to 1 decimal place. Enter the average tax rate as a percent rounded to 1 decimal place.)

a. What would be the marginal tax rate for a married couple with income of $90,000?

b. What would be the average tax rate for a married couple with income of $90,000?

c. What would be the marginal tax rate for an unmarried taxpayer with income of $90,000?

d. What would be the average tax rate for an unmarried taxpayer with income of $90,000?

Can you explain the difference between marginal and average tax rates?

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Answer #1

Marginal tax rate is the highest tax rate that an individual is charged. While average tax rate means the proportion of tax paid with respect to the taxable income.

a. Marginal tax rate for a married couple = 22% (slab $78,951 - $168,400)

d. Tax paid by a married couple = $9,086 + [($90,000 - $78,950) * 22%]

= $14,382.50 + $2,431

= $16,813.50

Average tax rate for a married couple = $16,813.50 / $90,000 = 18.68%

c. Marginal tax rate for an unmarried taxpayer = 24% (slab $84,201 - $160,725)

d. Tax paid by an unmarried taxpayer = $14,382.50 + [($90,000 - $84,200) * 24%]

= $14,382.50 + $1,392

= $15,774.5

Average tax rate for an unmarried taxpayer = $15,774.5 / $90,000 = 17.53%

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