4. Problem 1-39 (LO 1-3) (Algo)

Schedule Y-1-Married Filing Jointly or Qualifying Widow(er)

If taxable income is over:	But not over:	The tax is:
$ 0	$ 19,900	10% of taxable income
$ 19,900	$ 81,050	$1,990 plus 12% of the excess over $19,900
$ 81,050	$ 172,750	$9,328 plus 22% of the excess over $81,050
$ 172,750	$ 329,850	$29,502 plus 24% of the excess over $172,750
$ 329,850	$ 418,850	$67,206 plus 32% of the excess over $329,850
$ 418,850	$ 628,300	$95,686 plus 35% of the excess over $418,850
$ 628,300		$168,993.50 plus 37% of the excess over $628,300

Jorge and Anita, married taxpayers, earn $155,000 in taxable income and $45,000 in interest from an investment in City of Heflin bonds. (Use the U.S. tax rate schedule for married filing jointly).

Required:

a. If Jorge and Anita earn an additional $105,000 of taxable income, what is their marginal tax rate on this income?

b. What is their marginal rate if, instead, they report an additional $105,000 in deductions?

(For all requirements, do not round intermediate calculations. Round your answers to 2 decimal places.)

a. Marginal tax rate	%
b. Marginal Tax Rate	%