What would be the marginal and average tax rates for a marri

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 ($) Single Taxpayers 0-9,275 Married Taxpayers Filing Joint Returns Tax Rate (%) 10.0 15.0 25.0 28.0 33.0 35.0 39.6 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

Solution

a) Marginal tax rate would be simply the tax rate of the slab in which the taxable income falls.

Taxable income = $90,100

Status = Married

Slab in which income falls = 75,301 - 151,900

Marginal tax rate = 25.0%

b) For average tax rate, we need to compute the tax payable.

Average tax rate = Total tax payable / Total taxable income = 14067.50 / 90100 = 0.156132 or 15.6%

c)

Taxable income = $90,100

Status = single

Slab in which income falls = 37,651 - 91,150

Marginal tax rate = 25.0%

d)

Average tax rate = 18296.25 / 90100 = 0.2031 or 20.3%

Income	Tax payable
0 - 18,550	18,550 x 10% = 1855
18,551 - 75,300	(75,300 - 18,550) x 15% = 8512.50
75,301 - 90,100	(90,100 - 75,300) x 25% = 3700
Total	14067.50