Scot and Vidia married taxpayers earn 240000 in taxable inco

Scot and Vidia, married taxpayers, earn $240,000 in taxable income and $5,000 in interest from an investment in City of Tampa bonds. Using the U.S. tax rate schedule 2017 for married filing jointly, how much federal tax will they owe? What is their average tax rate? What is their effective tax rate? What is their current marginal tax rate?

Solution

Federal tax = 52222.5+(240000-233350)*0.33= 54417.00 Average tax rate = 54417/240000= 22.67% Effective tax rate = 54417/(240000+5000)= 22.21% Current marginal tax rate is 33% for increase upto $176700 and decrease in taxable income upto $6650