Question

Scot and Vidia, married taxpayers, earn $62,500 in taxable income and $5,000 in interest from an investment in City of Tampa bonds. (Use the U.S. tax rate schedule). (Do not round intermediate calculations. Round your answer to 2 decimal places.)

"MUST USE 2017 TAX RATE SCHEDULE"!!!!!!!!

A) If Scot and Vidia earn an additional $19,500 of taxable income, what is their marginal tax rate on this income?

B) How would your answer differ if they, instead, had $19,500 of additional deductions? The marginal tax rate is_____%

Answer 1

Ans 1
Presently they are in the slab 15% as per uS tax table 2016
If additional $19500 is earned
They will go another high slab as there I ncome is
above $75300 hence with any increase in incokme it will be
taxable at the rate of 25%
Marginal tax rate is 25%
Ans 2
If it’s a deduction of $19500 than their income
will be in the range of 15% and any additional incraese
in income will be yaxed at marginal rate of 15%