Jill and George are married and file a joint return. They expect to have $450,000 of taxable income in the next year and are considering whether to purchase a personal residence that would provide additional tax deductions of $40,000 for mortgage interest and real estate taxes.

View the 2022 tax rate schedule for the Married Filing Joint filing status. 

 

Tax Rate Schedule 

If taxable income is:	The tax is:
Not over $20,550 . . . . . . . . . . . . . . . . . .	10% of taxable income.
Over $20,550 but not over $83,550 . .	$2,055.00 + 12% of the excess over $20,550.
Over $83,550 but not over $178,150 .	$9,615.00 + 22% of the excess over $83,550.
Over $178,150 but not over $340,100	$30,427.00 + 24% of the excess over $178,150.
Over $340,100 but not over $431,900	$69,295.00 + 32% of the excess over $340,100.
Over $431,900 but not over $647,850	$98,671.00 + 35% of the excess over $431,900.
Over $647,850 . . . . . . . . . . . . . . . . . . . .	$174,253.50 + 37% of the excess over $647,850.

 

Question content area bottom

Part 1

Requirement a. What is their marginal tax rate for purposes of making this? decision?? (Enter amounts as percentages to one decimal? place.)

What is the marginal tax rate if the personal residence is not purchased?	35	%
What is the marginal tax rate if the personal residence is purchased?	32	%

Part 2

Requirement b. What is the tax savings if the residence is? acquired? ?(Do not round intermediary calculations. Only round the amounts you input in the cells to the nearest? cent.)

Tax without purchase of personal residence
Tax with purchase of personal residence
Tax savings