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Manny, a single taxpayer, earns $370,000 per year in taxable income and an additional $23,000 per year in city of Boston bonds.
If Manny earns an additional $70,000 in taxable income in year 2017, what is his marginal tax rate on this income?
please show work
Expert Answer
M’s income = 370000+23000= $393,000
M’s taxable income is 393000, Hence taxable income is In between 191650 to 416700, hence the marginal tax rate at that percent is 33%
Therefore marginal rate is 33% before consideration of additional taxable income,
If 70000 additional taxable income 70000 is considered then the marginal tax rate would be as follows
Taxable Income = $370000+$70000+$23000 =463000
From the above the taxable income is 463000, which is more than 418400, hence the marginal tax rate would be at 39.60%
Therefore the marginal tax rate in the year 2017 is 39.60%
*Note :tax rate is considered for single tax payer and for the year 2017 .
