Jorge and Anita, married taxpayers, earn $138,500 in taxable income and $42,000 in interest from an investment in City of Heflin bonds. (Use the U.S. tax rate schedule for married filing jointly).

Required:

1. If Jorge and Anita earn an additional $101,000 of taxable income, what is their marginal tax rate on this income?
2. What is their marginal rate if, instead, they report an additional $101,000 in deductions?

A. Marginal Tax rate %

B. Marginal tax rate %

2019 Tax Rate Schedules Individuals Schedule X-Single If taxable income is over: But not over: The tax is: $ 0 $ 9,700 10% of taxable income $ 9,700 $ 39,475 $970 plus 12% of the excess over $9,700 $ 39,475 $ 84,200 $4,543 plus 22% of the excess over $39,475 $ 84,200 $160,725 $14,382.50 plus 24% of the excess over $84,200 $160,725 $204,100 $32,748.50 plus 32% of the excess over $160,725 $204,100 $510,300 $46,628.50 plus 35% of the excess over $204,100 $510,300 $153,798.50 plus 37% of the excess over $510,300 Schedule Y-1-Married Filing Jointly or Qualifying Widow(er) If taxable income is over: But not over: The tax is: $ 0 $ 19,400 10% of taxable income $ 19,400 $ 78,950 $1,940 plus 12% of the excess over $19,400 $ 78,950 $168,400 $9,086 plus 22% of the excess over $78,950 $168,400 $321,450 $28,765 plus 24% of the excess over $168,400 $321.450 $408,200 $65,497 plus 32% of the excess over $321,450 $408,200 $612,350 $93,257 plus 35% of the excess over $408,200 $612,350 $164,709.50 plus 37% of the excess over $612,350 Schedule Z-Head of Household Schedule Z-Head of Household If taxable income is over: But not over: The tax is: $ 0 $ 13,850 10% of taxable income $ 13,850 $ 52,850 $1,385 plus 12% of the excess over $13,850 $ 52,850 $ 84,200 $6,065 plus 22% of the excess over $52,850 $ 84,200 $160,700 $12,962 plus 24% of the excess over $84,200 $160,700 $204,100 $31,322 plus 32% of the excess over $160,700 $204,100 $510,300 $45,210 plus 35% of the excess over $204,100 $510,300 $152,380 plus 37% of the excess over $510,300 Schedule Y-2-Married Filing Separately If taxable income is over: But not over: The tax is: $ 0 $ 9,700 10% of taxable income $ 9,700 $ 39,475 $970 plus 12% of the excess over $9,700 $ 39,475 $ 84,200 $4,543 plus 22% of the excess over $39,475 $ 84,200 $160,725 $14,382.50 plus 24% of the excess over $84,200 $160,725 $204,100 $32,748.50 plus 32% of the excess over $160,725 $204,100 $306,175 $46,628.50 plus 35% of the excess over $204,100 $306,175 $82,354.75 plus 37% of the excess over $306,175