Manny,a single taxpayer,earns $65,000 per year in taxable income and an additional $12,000 per year in city of Boston bonds.If Manny earns an additional $35,000 in taxable income in year 2013,what is his marginal tax rate (rounded) on this income?
A)22.86%
B)28.00%
C)26.04%
D)25.00%
E)None of these

Question

Quizplus · Accepted Answer

First, we need to calculate Manny's total taxable income for the year:
$65,000 (taxable income) + $12,000 (city of Boston bonds) = $77,000
If he earns an additional $35,000 in taxable income in 2013, his new total taxable income would be:
$77,000 + $35,000 = $112,000
To determine Manny's marginal tax rate on this additional income, we need to consult the 2013 tax brackets for single taxpayers. Based on the IRS tax brackets for that year, any taxable income above $87,850 would fall into the 28% tax bracket. 
So, $112,000 - $87,850 = $24,150, which is Manny's taxable income that falls into the 28% tax bracket. Therefore, his marginal tax rate on this additional income would be 28%.

Manny,a Single Taxpayer,earns $65,000 Per Year in Taxable Income and an Additional