Marc, a single taxpayer, earns $135,000 in taxable income and $2,500 in interest from an investment in city of Birmingham Bonds. Using the U.S. tax rate schedule for year 2018, what is his average tax rate? (Use tax rate schedule)

Multiple Choice

• 19.77%

• 16.54%

• 11.96%

• 26.54%

• None of the choices are correct.

2018 Tax Rate Schedules Individuals Schedule X-Single If taxable income is over: But not over: The tax is: $ 0 $ 9,525 10% of taxable income $ 9,525 $ 38,700 8952.50 plus 12% of the excess over $9,525 $ 38,700 $ 82,500 $4,453.50 plus 22% of the excess over $38,700 $ 82,500 $157,500 $14,089.50 plus 24% of the excess over $82,500 $157,500 $200,000 $32,089.50 plus 32% of the excess over $157,500 $200,000 $500,000 $45,689.50 plus 35% of the excess over $200,000 $500,000 - $150,689.50 plus 37% of the excess over $500,000 Schedule Y 1 Married Filing Jointly or Qualifying Widow(er) If taxable income is over: But not over: The tax is: $ 0 $ 19,050 10% of taxable income $ 19,050 $ 77,400 $1,905 plus 12% of the excess over $19,050 $ 77,400 $165,000 $8,907 plus 22% of the excess over $77,400 $165.000 $315,000 $28,179 plus 24% of the excess over $165.000 $315.000 $400,000 $64,179 plus 32% of the excess over $315.000 $400,000 $600,000 $91,379 plus 35% of the excess over $400.000 $600,000 - $161.379 plus 37% of the excess over $600.000 Schedule Z Head of Household If taxable income is over. But not over: The tax is: 5 0 13600 10% of taxable income 5 13.600 S 51.800 $1,360 plus 12% of the excess over $13.600 Tech O Type here to search FjF2 F4 F5 F6 $ 0 $ 19,050 $ 77,400 $165,000 $315,000 $400,000 $600,000 | $ 19,050 $ 77,400 $165,000 $315,000 $400,000 $600,000 10% of taxable income $1,905 plus 12% of the excess over $19,050 $8,907 plus 22% of the excess over $77,400 $28,179 plus 24% of the excess over $165,000 $64.179 plus 32% of the excess over $315,000 $91,379 plus 35% of the excess over $400,000 $161,379 plus 37% of the excess over $600,000 Schedule Z-Head of Household If taxable income is over: But not over: The tax is: $ 0 $ 13,600 10% of taxable income $ 13,600 $ 51,800 $1,360 plus 12% of the excess over $13,600 $ 51,800 $ 82,500 $5,944 plus 22% of the excess over $51,800 $ 82,500 $157,500 $12,698 plus 24% of the excess over $82,500 $157,500 $200,000 $30,698 plus 32% of the excess over $157,500 $200,000 $500,000 $44,298 plus 35% of the excess over $200,000 $500,000 $149,298 plus 37% of the excess over $500,000 Schedule Y-2-Married Filing Separately If taxable income is over: But not over: The tax is: $ 0 $ 9,525 10% of taxable income $ 9,525 $ 38,700 $952.50 plus 12% of the excess over $9,525 $ 38,700 $ 82,500 $4,453.50 plus 22% of the excess over $38,700 S 82,500 $157,500 $14,089 50 plus 24% of the excess over $82,500 $157,500 $200,000 $32,089 50 plus 32% of the excess over $157,500 $200,000 $300,000 545,689 50 plus 35% of the excess over $200.000 $300,000 580.689 50 plus 37% of the excess over $300,000 O Type here to search 0