Fred and Wilma,married Taxpayers,earn $100,000 in Taxable Income and $20,000

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The Answer is Fred and Wilma will owe $13,879 in federal income tax this year computed as follows:$13,879 = $8,907 + (22% × ($100,000 − $77,400)). Fred and Wilma's average tax rate is 13.88%. Average Tax Rate = Total Tax/Taxable Income = $13,879/$100,000 = 13.88% Fred and Wilma's effective tax rate is 11.57%. Effective Tax Rate = Total Tax/Total Income = $13,879/($100,000 + $20,000)= 11.57% Fred and Wilma are currently in the 22% tax rate bracket.Their marginal tax rate on small increases in income and deductions is 25%. If Fred and Wilma earn an additional $40,000 of taxable income,their marginal tax rate on the income is 22.00%. Marginal Tax Rate = Change in Tax/Change in Taxable Income = ($22,679 -$13,879)/($140,000 − $100,000)= 22.00%

Fred and Wilma,married Taxpayers,earn $100,000 in Taxable Income and $20,000

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