Tax planning analyses should be based on the average tax rates that the individual will pay or save by adopting a particular course of action.

Question

Quizplus · Accepted Answer

Tax planning analyses should be based on the marginal tax rate, not the average tax rate, because the marginal rate reflects the tax rate that applies to the next dollar of taxable income, which is crucial for making informed decisions about specific financial actions.

Tax Planning Analyses Should Be Based on the Average Tax