If a taxpayer has a choice of receiving income in the current year versus the following year, which of the following tax rates is important in determining the year in which he should include the income?

Question

Quizplus · Accepted Answer

The marginal tax rate is the rate at which the next dollar of income will be taxed. Therefore, it is important in determining the year in which income should be included because it indicates the tax liability resulting from receiving the income in each year. If the marginal tax rate is higher in the current year compared to the following year, it would be advantageous to delay receiving the income to the following year to reduce the tax liability.

If a Taxpayer Has a Choice of Receiving Income in the Current