eBook Problem Walk$-$Through

Susan and Stan Britton are a married couple who file a joint income tax return, where the tax rates are based on the tax table $3\mathrm{.}5.$ Assume that their taxable income this year was $$384,000.$ Do not round intermediate calculation.

What is their federal tax liability? Round your answer to the nearest dollar.

$

What is their marginal tax rate? Round your answer to the nearest whole number.

$\%$

What is their average tax rate? Round your answer to two decimal places.

$\%$Single Individuals

Notes:

These are the $2020$ tax rates that will be paid on tax returns due April $15,2021.$ The income ranges at

which each tax rate takes effect are indexed with inflation, so they change each year.

The average tax rates are always below the marginal rates, but in $2020$ the average at the top of the

brackets approaches $37\%$ as taxable income rises without limit$.$

In $2018,$ the personal exemption for the taxpayer and dependents was eliminated. With the deduction

limitation on state and local property, income, and sales taxes and the existence of payroll taxes $($Social

Security and Medicare taxes$),$ the $2020$ effective tax rate will be higher than $37\%.$