Jorge and Anita, married taxpayers, earn $143,500 in taxable income and $52,000 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 $106,000 of taxable income, what is their marginal tax rate on this income?
2. What is their marginal rate if, instead, they report an additional $106,000 in deductions?

(For all requirements, do not round intermediate calculations. Round your answers to 2 decimal places.)

Schedule Y-1-Married Filing Jointly or Qualifying Widow(er)

If taxable income is over:	But not over:	The tax is:
$ 0	$ 19,750	10% of taxable income
$ 19,750	$ 80,250	$1,975 plus 12% of the excess over $19,750
$ 80,250	$171,050	$9,235 plus 22% of the excess over $80,250
$171,050	$326,600	$29,211 plus 24% of the excess over $171,050
$326,600	$414,700	$66,543 plus 32% of the excess over $326,600
$414,700	$622,050	$94,735 plus 35% of the excess over $414,700
$622,050		$167,307.50 plus 37% of the excess over $622,050