Assume the following income tax table. Income Range Marginal Tax rate $20,000 and below 10% 20,001
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Question:
Assume the following income tax table.
Income Range Marginal Tax rate
$20,000 and below 10%
20,001 – 50,000 15%
50,001 – 120,000 20%
120,001 – 200,000 25%
200,001 – 500,000 30%
More than 500,000 35%
The O’Brien Family has the following income items:
Salaries $180,000
Dividend income $20,000
Interest income on savings account $5,500
Interest income on municipal bonds $3,000
Short term capital gains $45,000
The standard deduction for the year is $24,000 and itemized deductions for the family is $22,500.
a) Determine taxable income for the O’Brien Family
b) Calculate the tax
c) What is their average tax rate?
d) What is their marginal tax rate?
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