Marginal Tax Rate The marginal tax rate (MTR) is the total amount of additional tax due on one additional dollar of taxable income. What was the MTR in this example? Medicare % Social Security % (if income is under the maximum) Federal % (tax rate on the last dollar of ordinary income) Total % Note: Many states also impose a tax on income, which would increase the marginal tax rate. Tax Savings Postponing reporting taxable income results in postponement of taxes, and having the use of the money that would have been paid in taxes for an extra year. 1. How much added tax would you have to pay if you had sold all of your corn that you had at the end of the year for $20,000 additional revenue? 2. How much additional interest cost would be incurred by having less cash available due to paying taxes a year earlier? Multiply line 1 by an assumed interest rate of 6%. 3. How much interest cost would be saved by having cash available from selling corn sooner? Assume the sale value would not change from your calculation in line 1, and that income would be received 4 months sooner. Multiply line 1 by 6%, for 4 months. $ 4. Would the interest savings have exceeded the extra interest cost from paying taxes a year sooner? Marginal Tax Rate The marginal tax rate (MTR) is the total amount of additional tax due on one additional dollar of taxable income. What was the MTR in this example? Medicare % Social Security % (if income is under the maximum) Federal % (tax rate on the last dollar of ordinary income) Total % Note: Many states also impose a tax on income, which would increase the marginal tax rate. Tax Savings Postponing reporting taxable income results in postponement of taxes, and having the use of the money that would have been paid in taxes for an extra year. 1. How much added tax would you have to pay if you had sold all of your corn that you had at the end of the year for $20,000 additional revenue? 2. How much additional interest cost would be incurred by having less cash available due to paying taxes a year earlier? Multiply line 1 by an assumed interest rate of 6%. 3. How much interest cost would be saved by having cash available from selling corn sooner? Assume the sale value would not change from your calculation in line 1, and that income would be received 4 months sooner. Multiply line 1 by 6%, for 4 months. $ 4. Would the interest savings have exceeded the extra interest cost from paying taxes a year sooner