What would be the marginal and average tax rates for a married couple with taxab

Question

What would be the marginal and average tax rates for a married couple with taxable income of $90,100? For an unmarried taxpayer with the same income? Use Table 3.7. (Do not round intermediate calculations. Enter the marginal tax rate as a percent rounded to 1 decimal place. Enter the average tax rate as a percent rounded to 1 decimal place.)

a. What would be the marginal tax rate for a married couple with income of $90,100?

b. What would be the average tax rate for a married couple with income of $90,100?

c. What would be the marginal tax rate for an unmarried taxpayer with income of $90,100?

d. What would be the average tax rate for an unmarried taxpayer with income of $90,100?

TABLE 3.7 Personal tax rates, 2016 Taxable Income ($) Married Taxpayers Filing Joint Returns Tax Rate (%) 10.0 15.0 25.0 28.0 33.0 35.0 39.6 Single Taxpayers 0-9,275 0-18,550 9,276-37,650 37,651-91,150 91,151-190,150 190,151-413,350 413,351-415,050 415,051 and above 18,551-75,300 75,301-151,900 151,901-231,450 231,451-413,350 413,351-466,950 466,951 and above 4 Losses can be carried back for a maximum of 3 years and forward for up to 15 years

Explanation / Answer

Married Couple:

Income = 90100

It falls in 75301-151900 slab hence, tax=18550*10%+(75300-18551)*15%+(90100-75301)*25%=14067.1

Average Tax rate=14067.1/90100=15.61%

Marginal Tax rate=25% because for an additional income, it would still be in the same tax slab of 25%

Unmarried Couple:

Income = 90100

It falls in 37651-91150 slab hence, tax=9275*10%+(37650-9276)*15%+(90100-37651)*25%=18295.85

Average Tax rate=18295.85/90100=20.30%

Marginal Tax rate=25% because for an additional income, it would still be in the same tax slab of 25%

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