Lee's 2014 taxable income is $88,000 before considering charitable contributions. Lee is a single individual. She makes a donation of $10,000 to the American Heart Association in December 2014. By how much did Lee's marginal tax rate decline simply because of the donation?

Question

Quizplus · Accepted Answer

Charitable contributions reduce taxable income, but they do not directly affect the marginal tax rate. The marginal tax rate is determined by the tax bracket Lee falls into, which is based on her taxable income. The donation reduces taxable income, potentially moving her to a lower bracket, but the question asks for the change in marginal rate due to the donation itself, which is 0%.

Lee's 2014 Taxable Income Is $88,000 Before Considering Charitable Contributions