An investor who has $75,000 in taxable income purchases a building that produces another $15,000 in taxable income.According to the table below,what is the marginal tax rate?

Question

Quizplus · Accepted Answer

To determine the marginal tax rate, we need to look at the taxable income range that includes the total taxable income of $90,000 ($75,000 + $15,000).

From the table, we can see that the taxable income range of $82,501 to $157,500 has a marginal tax rate of 24%.

So, the investor's taxable income of $90,000 falls within this range, but the additional $15,000 from the building pushes them into the next tax bracket.

The taxable income range of $157,501 to $200,000 has a marginal tax rate of 32%.

Using the formula for marginal tax rate, which is:

Marginal Tax Rate = (Tax liability at $90,000 + $15,000 taxable income) - (Tax liability at $90,000 taxable income) / $15,000

We get:

Marginal Tax Rate = (($24,988 + $4,800) - $24,988) / $15,000 = 29.57%

Therefore, the correct answer is B) 29.57%.

An Investor Who Has $75,000 in Taxable Income Purchases a Building