Marginal Tax Rate = = = 25.00% (36) [LO3] In reviewing the tax rate schedule for a single taxpayer, Chuck notes that the tax on $75,000 is $4,681.25 plus 25 percent of the taxable income over $34,000. What does the $4,681.25 represent? The $4,681.25 represents the income tax on $34,000 – i.e., $837.5 + 15% ($34,000 – 8,375). (37) [LO3] Campbell, a single taxpayer, earns $400,000 in taxable income and $2,000 in interest from an investment in State of New York bonds. Using the U.S. tax rate schedule, how much federal tax will she owe? What is her average tax rate? What is her effective tax rate? What is her current marginal tax rate? Campbell will owe $117,643.75 in federal income tax this year computed as follows: $117,643.75 = $108,421.25 + 35% x ($400,000 - $373,650)).
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This note was uploaded on 04/04/2012 for the course ACCT 26373 taught by Professor Hall during the Spring '10 term at Texas State.