20xx Tax Rates, Single Individual

Taxable Income Tax Payable

$ 0 - 8,925 10% of TI

$ 8,925 - 36,250 $ 892.50 + 15.0% of (TI - 8,925)

$ 36,250 - 87,850 $ 4,991.25 + 25.0% of (TI - 36,250)

$ 87,850 - 183,250 $ 17,891.25 + 28.0% of (TI - 87,850)

$ 183,250 - 398,350 $ 44,603.25 + 33.0% of (TI - 183,250)

$ 398,350 - 400,000 $115,586.25 + 35.0% of (TI - 398,350)

Over $400,000 $116,163.75 + 39.6% of (TI 400,000)

1. If a farmer has a taxable income total of $190,000.00, what is their tax bill? Use the table above (6 points)
2. With a taxable farm income of $190,000, how much less taxes would be paid with another $5,000 of tax deductible expenses? (4 points)
3. With a taxable income of $190,000, how much less taxes would be paid by a $4,000 tax credit? (2 points)
4. Which would this farmer (with $190,000 taxable income) prefer, $5,000 more ordinary income (on top of the $190,000) or additional income of $3,941 that is taxed at a capital gain rate of 15%? MUST SHOW WORK, round to the nearest whole dollar (6 points)
5. If a farmer has a taxable income total of $550,000, what is their tax bill? Use the table above (6 points)
6. If this farmer could pre-pay some expenses to lower income taxes, how many dollars of expenses would she (or he) need to pay to move down to the next lower tax bracket? (4 points)