Mr. Hoosier has gathered all these data about his finances.

Salary

$159,000

Taxable interest

$5600

Municipal Bond interest

$20,000

Total Itemized deductions

$9500

The personal exemption is $4700. The standardized deduction for a single filer is 5000.

Single Filer

If Taxable Income is

Then tax is:

0-8000

10% of the amount over 0

8000- 35,000

800 + 15% of the amount over 8000

35000- 55,000

4850 + 20% of the amount over 35000

55000- 150,000

8850 + 30% of the amount over 55000

150000 200000

37350 + 35% of the amount over 150000

200000 and over

54850 + 40% of the amount over 200000

Married filing jointly:

If Taxable Income is

Then tax is:

0-8000

10% of the amount over 0

8000- 35,000

800 + 18% of the amount over 8000

35000- 55,000

4850 + 22% of the amount over 35000

55000- 150,000

8850 + 35% of the amount over 55000

150000 200000

37350 + 37% of the amount over 150000

200000 and over

54850 + 45% of the amount over 200000

a. What is his tax?

b. His average effective tax rate

c. His average tax rate

d. His marginal tax rate

e. Assume he discovers that he is eligible for a 500 tax deduction. How much does his tax liability fall with

that addition?

f. Now he discovers that he is eligible for a $500 tax credit. How much does his tax liability fall due to this

credit?