What allows the owner-manager to calculate the after-tax effects of extra income and expenses?

Question

Quizplus · Accepted Answer

The marginal tax rate is the rate at which additional income is taxed, and it allows the owner-manager to calculate the after-tax effects of extra income and expenses. By knowing their marginal tax rate, they can determine how much of the extra income will be taxed and how much they will actually get to keep. Deductibles and tax deferral are also important concepts to understand for tax planning purposes, but they do not directly help the owner-manager calculate after-tax effects of income and expenses. The total tax rate is not as useful as the marginal tax rate because it does not take into account the fact that different levels of income are taxed at different rates.

What Allows the Owner-Manager to Calculate the After-Tax Effects of Extra