A business has net income before federal income tax of $60,000. According to the tax rate schedule, the first $50,000 of taxable income is taxed at 15%. The next $25,000 of taxable income is taxed at 25%. The marginal tax rate that would be applied to an additional dollar of taxable income would be

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The marginal tax rate is the rate at which the next dollar of taxable income is taxed. Since the business has $60,000 of taxable income, which is above the first $50,000 bracket but within the $50,000 to $75,000 bracket, the next dollar of income would be taxed at 25%.

A Business Has Net Income Before Federal Income Tax of $60,000