Question

Based on the amounts of taxable income​ provided, compute the federal income tax payable in 2017 on each amount assuming the taxpayers are married filing a joint return.​ Also, for each amount of taxable​ income, compute the average tax rate and the marginal tax rate.

Taxable income of $50,000.

. Taxable income of $125,000.

. Taxable income of $380,000.

. Taxable income of $510,000

Answer 1

Part A

Taxable income of 50000

Federal income tax

Basic tax =1865

+15% excess of 18650 = 15%*(50000-18650)= 4702.50

Total federal income tax= 6567.50

Average tax rate= federal income tax/taxable income=6567.50/50000= 13.14%

Marginal tax rate= 15% because it falls in tax bracket of 15%

Part B taxable income of 125000

Basic tax= 10452.50

+25% additional tax over 75900= 25%*(125000-75900)= 12275

Total federal income tax= 22727.50

Average tax rate= federal income tax/taxable income=22727.50/125000= 18.18%

Marginal tax rate= 25%

Part C taxable income 380000

Basic tax=52222.50

+Additional 33% tax on excess over 233350=33%*(380000-233350)=48394.50

Total federal income tax=100617

Average tax rate=1000617/380000= 26.48%

Marginal tax rate= 33%

Part D taxable income 510000

Basic tax= 131628

+ 39.60% additional tax on excess over 470700= 39.60*(510000-470700)= 39300

Total federal income tax= 170928

Average tax rate= 170928/510000= 33.52%

Marginal tax rate= 39.60%