Question

Marci has taxable income of $50,000. She is single and her tax rates are 10% on the first $9,075 of taxable income, 15% of the amount over $9,075 up to $36,900 of taxable income, and 25% on the remainder. What is Marci's tax liability? What is Marci's marginal tax rate?

Answer 1

Tax Liability is calculated below usning tax rate at different Slabs:

Marginal tax = ($9,075 × 10%) + ($36,900 - $9,075) × 15% + ($50,000 - $36,900) × 25%

                      = $907.50 + $4,173.75 + $3,275

                      = $8,356.26

Hence, Tax liability is $8,356.25.

b.

Marginal tax rate is calculated below:

Marginal tax rate = $8,356.25 / $50,000

                             = 16.71%

Hence, Marginal tax rate for 16.71% and tax liability is $8,356.25.