Chapter 3 Activity - Taxes Individual Income Tax Brackets (2020) Marginal Tax Rate Single, taxable Joint, taxable income over: income over: Head of Household, taxable income over: 10% $0 $0 12% $9,875 $19,750 $14,100 22% $40,125 $80,250 $53,700 24% $85,525 $171,050 $85,500 32% $163,300 $326,600 $163,300 35% $207,350 $414,700 $207,350 37% $518,400 $622,050 $518,400 Standard Deduction Amounts (2020) Filing Status Deduction Amount Single $12,400 Married Filing Jointly $24,800 Head of Household $18,650 Long-term Capital Gains & Qualified Dividends (2020) Tax Rate Single Joint Head of Household 0% Under $40,000 Under $80,000 Under $53,600 15% $40,000 $80,000 $53,600 20% $441,450 $496,600 $469,050 Additional 3.8% Net Investment Income Tax for MAGI over $200,000/$250,000/$200,000 + 1. Calculate the federal income tax liability, marginal tax rate, and average tax rate for each of the following scenarios. Assume the following for all scenarios: all income is traditionally earned, the maximum allowable standard deduction is taken, and no other deductions/credits are applied. Joint Gross Income Taxable Income Single Income Tax Marginal Average Taxable Income Tax Marginal Rate Rate Income Rate Average Rate $40,000 $75,000 $150,000 $500,000 $1,000,000 $10,000,000 2. REACTION: What do you make of your findings above? What surprised (or did not surprise) you