Leonardo earns 80000 of taxable income He also has 15000 in

Leonardo earns $80,000 of taxable income. He also has $15,000 in city of Tulsa bonds. His wife, Theresa, earns $50,000 of taxable income.

If Leonardo and his wife file married filing jointly in 2017, what would be their average tax rate?

Solution

Leonardo taxable income = $80000

Income in Tulsa bonds = $15000, exempt

His wife theresa taxable income = $50000

Jointly taxable income = 130000

Leonardo and his wife file married filing jointly in 2017, then tax =

Upto 18650 = 10%

$18,650 to $75,900 = 15 %

$75,900 to $153,100 = 25%

Tax = $10,452.50 plus 25% of the excess over $75,900

= $10,452.50 plus 25% * ( 130000 - 75900)

= $23,977.5

Average tax rate = 23977.5 / 130000 * 100

= 18.44 %