Texts: A single taxpayer earns $75,000 in taxable income and $10,000 in interest from an investment in City of Heflin bonds. (Use the U.S. Tax Rate Schedule below)
Required:
1. How much federal tax will he owe?
2. What is his average tax rate?
3. What is his effective tax rate?
4. What is his current marginal tax rate?
Please show your steps and solve in Excel. Do not round intermediate calculations.
2023 Tax Rate Schedules
Individuals
Schedule X - Single
If taxable income is over: But not over: The tax is:
$0 $11,000 10% of taxable income
$11,000 $44,725 $1,100 plus 12% of the excess over $11,000
$44,725 $95,375 $5,147 plus 22% of the excess over $44,725
$95,375 $182,100 $16,290 plus 24% of the excess over $95,375
$182,100 $231,250 $37,104 plus 32% of the excess over $182,100
$231,250 $578,125 $52,832 plus 35% of the excess over $231,250
$578,125 — $174,238.25 plus 37% of the excess over $578,125
Schedule Y-1 - Married Filing Jointly or Qualifying surviving spouse
If taxable income is over: But not over: The tax is:
$0 $22,000 10% of taxable income
$22,000 $89,450 $2,200 plus 12% of the excess over $22,000
$89,450 $190,750 $10,294 plus 22% of the excess over $89,450
$190,750 $364,200 $32,580 plus 24% of the excess over $190,750
$364,200 $462,500 $74,208 plus 32% of the excess over $364,200
$462,500 $693,750 $105,664 plus 35% of the excess over $462,500
$693,750 — $186,601.5 plus 37% of the excess over $693,750
Schedule Z - Head of Household
If taxable income is over: But not over: The tax is:
$0 $15,700 10% of taxable income
$15,700 $59,850 $1,570 plus 12% of the excess over $15,700
$59,850 $95,350 $6,868 plus 22% of the excess over $59,850
$95,350 $182,100 $14,678 plus 24% of the excess over $95,350
$182,100 $231,250 $35,498 plus 32% of the excess over $182,100
$231,250 $578,100 $51,226 plus 35% of the excess over $231,250
$578,100 — $172,623.5 plus 37% of the excess over $578,100
Schedule Y-2 - Married Filing Separately
If taxable income is over: But not over: The tax is:
$0 $11,000 10% of taxable income
$11,000 $44,725 $1,100 plus 12% of the excess over $11,000
$44,725 $95,375 $5,147 plus 22% of the excess over $44,725
$95,375 $182,100 $16,290 plus 24% of the excess over $95,375
$182,100 $231,250 $37,104 plus 32% of the excess over $182,100
$231,250 $346,875 $52,832 plus 35% of the excess over $231,250
$346,875 — $93,300.75 plus 37% of the excess over $346,875