The tax cost of a transaction depends on the taxpayer's average tax rate for the year.

Name: The tax cost of a transaction depends on the taxpayer's average tax rate for the year.
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The tax cost of a transaction depends on the taxpayer's marginal tax rate, not the average tax rate. The marginal tax rate is the rate at which the last dollar of income is taxed, which can affect the tax cost of additional income or deductions.

The Tax Cost of a Transaction Depends on the Taxpayer's