Calculate The Marginal Tax Rate On The Additional Income 549738

In 2012, Jack and Diane Heart are married with two children, ages 10 and 12.

Jack works full-time and earns an annual salary of $75,000, while Diane works as a substitute teacher and earns approximately $25,000 per year. Jack and Diane expect to file jointly and do not itemize their deductions. In the fall of this year, Diane was offered a full-time teaching position that would pay her an additional $20,000. (Round your answers to 2 decimal places. Omit the “%” sign in your response.)

a. Calculate the marginal tax rate on the additional income, excluding employment taxes, to help Jack and Diane evaluate the offer.

Marginal tax rate 27.5% (Got it)

b. Calculate the marginal tax rate on the additional income, including employment taxes, to help Jack and Diane evaluate the offer.

Marginal tax rate 33.15% (Got it)

c. Calculate the marginal tax rate on the additional income, including self employment taxes, if Diane earned an additional $20,000 (for a total of $45,000 self-employment income) as a self-employed contractor instead of as an employee.