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Jill and George are married and file a joint return. They expect to have $425,000 of...

Jill and George are married and file a joint return. They expect to have $425,000 of taxable income in the next year and are considering whether to purchase a personal residence that would provide additional tax deductions of $40,000 for mortgage interest and real estate taxes.

Requirement a. What is their marginal tax rate for purposes of making this​ decision?​ (Enter amounts as percentages to one decimal​ place.)

What is the marginal tax rate if the personal residence is not purchased?

35

%

What is the marginal tax rate if the personal residence is purchased?

32

%

Requirement b. What is the tax savings if the residence is​ acquired? ​(Do not round intermediary calculations. Only round the amounts you input in the cells to the nearest​ cent.)

Tax without purchase of personal residence

Tax with purchase of personal residence

Tax savings
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