Chuck, a single taxpayer, earns $78,700 in taxable income and $14,100 in interest from an investment in City of Heflin bonds. (Use the U.S. tax rate schedule)

Required:

a. If Chuck earns an additional $40,000 of taxable income, what is his marginal tax rate on this income?

b. What is his marginal rate if, instead, he had $40,000 of additional deductions?

Table 1. Tax Brackets and Rates, 2021 For Unmarried Individuals For Married Individuals Filing Joint Returns For Heads of Households so to $9.950 so to $19.900 so to $14,200 $9.951 to $40,525 $19,901 to $81,050 $14,201 to $54,200 $40,526 to $86,375 $81,051 to $172,750 $54,201 to $86,350 $86,376 to $164.925 $172,751 to $329,850 $86,351 to $164.900 $164.926 to $209,425 $329,851 to $418,850 $164.901 to $209,400 $209,426 to $523,600 $418,851 to $628,300 $209,401 to $523,600 $523,601 or more 5628,301 or more $523,601 or more Table 1. Tax Brackets and Rates, 2021 For Unmarried Individuals For Married Individuals Filing Joint Returns For Heads of Households so to $9.950 so to $19.900 so to $14,200 $9.951 to $40,525 $19,901 to $81,050 $14,201 to $54,200 $40,526 to $86,375 $81,051 to $172,750 $54,201 to $86,350 $86,376 to $164.925 $172,751 to $329,850 $86,351 to $164.900 $164.926 to $209,425 $329,851 to $418,850 $164.901 to $209,400 $209,426 to $523,600 $418,851 to $628,300 $209,401 to $523,600 $523,601 or more 5628,301 or more $523,601 or more