Loretta is a single taxpayer has the following income and deductions for the current tax year:

INCOME

Salary $ 70,000

Business Income 25,000

Interest Income from bonds 10,000

Tax-exempt bond interest 5,000

Total Income $110,000

DEDUCTIONS: Business expenses $ 10,000

Itemized deductions 20,000

Personal exemption 4,000

Requirements:

Compute the taxable income and federal tax liability for the current year

Compute the marginal, average and effective tax rates.

For tax planning purposes, which of the three rates in part 2 is the most important?