Tax Rates. Lillian, a single taxpayer, had the following income and deductions for the tax year 2018:

INCOME:             

Salary ....................................................$ 90,000

Business Income ..................................24,000

Interest income from taxable bonds ..8,000

Tax-exempt bond interest ...................4,100

TOTAL INCOME ...................................126,100

DEDUCTIONS:

Business expenses ...........................$ 9,000

Itemized deductions ..........................15,000

TOTAL DEDUCTIONS ........................24,000

a). Compute Lillian’s taxable income and federal tax liability for 2018 (round to dollars).

b). Compute Lillian’s marginal, average, and effective tax rates.

c). For tax planning purposes, which of the three rates in Part b is the most important?