Single person
If taxable income is:		The tax is:
	Not over $9,275	10% of taxable income.
	Over $9,275 but not over $37,650	$927.50 + 15% of the excess over $9,275.
	Over $37,650 but not over $91,150	$5,183.75 + 25% of the excess over $37,650.
	Over $91,150 but not over $190,150	$18,558.75 + 28% of the excess over $91,150.
	Over $190,150 but not over $413,350	$46,278.75 + 33% of the excess over $190,150.
	Over $413,350 but not over $415,050	$119,934.75 + 35% of the excess over $413,350.
	Over $415,050	$120,529.75 + 39.6% of the excess over $415,050.

Christina, who is single, is considering purchasing a vacation home secured by a mortgage loan. Because she owns just one other home, the interest from this mortgage loan is deductible, as well as the property taxes. Christina projects that she will pay mortgage interest and property taxes of $40,000 per year on the vacation home. Her adjusted gross income is $250,000, and she is in the 33% marginal tax bracket. Christina has other itemized deductions of $10,000 per year. Please refer to the 2016 Tax Rate Schedules, deduction, and exemptions amounts provided on the inside front cover of your textbook. Using the information above and 2016 rates, what is Christinas average tax rate?

a. 33%

b. 24.10%

c. 24.59%

d. 19.27%

Christina, who is single, is considering purchasing a vacation home secured by a mortgage loan. Because she owns just one other home, the interest from this mortgage loan is deductible, as well as the property taxes. Christina projects that she will pay mortgage interest and property taxes of $40,000 per year on the vacation home. Her adjusted gross income is $250,000, and she is in the 33% marginal tax bracket. Christina has other itemized deductions of $10,000 per year.

What is Christinas tax savings from purchasing the vacation home?

a. $82,500

b. $40,000

c. $0

d. $13,200