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Chuck, a single taxpayer, earns $81,500 in taxable income and $20,250 in interest from an...

Question:

Chuck, a single taxpayer, earns $81,500 in taxable income and $20,250 in interest from an investment in City of Heflin bonds. (Use the U.S. tax rate schedule.)

a. If Chuck earns an additional $46,500 of taxable income, what is his marginal tax rate on this income?

b. What is his marginal rate if, instead, he had $46,500 of additional deductions?

Marginal Tax Rate:

The marginal tax rate is the tax rate you would be paying on the next dollar earned. It is the highest tax rate applicable to your income. The highest tax rate applicable to US individuals in 2018 is 37%.

Answer and Explanation:

The 2018 tax brackets for single filers are:

Tax rateTaxable income bracketTax owed
10%$0 to $9,52510% of taxable income
12%$9,526 to $38,700$952.50...

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