Answer to Question #291045 in Economics for Jen

Question

Jill and Gary are married and file a joint return. They expect to have $180,000 of taxable income in the next year and are considering whether to purchase a personal residence that would provide additional tax deductions of $36,000 for mortgage interest and real estate taxes.

What is their marginal tax rate for purposes of making this​ decision?

What is the tax savings if the residence is​ acquired?

Married, Filing Joint and Surviving Spouse

If taxable income is: The tax is:

Not over $19,900 10% of taxable income.

Over $19,900 but not over $81,050 $1,990.00 + 12% of the excess over $19,900.

Over $81,050 but not over $172,750 $9,328.00 + 22% of the excess over $81,050.

Over $172,750 but not over $329,850 $29,502.00 + 24% of the excess over $172,750.

Over $329,850 but not over $418,850 $67,206.00 + 32% of the excess over $329,850.

Answer 1

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