Chapter 3 Activity – Taxes Individual Income Tax Brackets (2021) Marginal Tax Rate Single, taxable income over: Joint, taxable income over: Head of Household, taxable income over: 10% $0 $0 $0 12% $9,950 $19,900 $14,200 22% $40,525 $81,050 $54,200 24% $86,375 $172,750 $86,350 32% $164,925 $329,850 $164,900 35% $209,425 $418,850 $209,400 37% $523,600 $628,300 $523,600 Standard Deduction Amounts (2021) Filing Status Deduction Amount Single $12,550 Married Filing Jointly $25,100 Head of Household $18,800 Long-term Capital Gains & Qualified Dividends (2021) Tax Rate Single Joint Head of Household 0% Under $40,000 Under $80,800 Under $54,100 15% $40,400 $80,800 $54,100 20% $445,850 $501,600 $473,750 Additional 3.8% Net Investment Income Tax for MAGI over $200,000 / $250,000 / $200,000 Calculate the federal income tax liability, marginal tax rate, and average tax rate for each of the following scenarios. Assume the following for all scenarios: all income is traditionally earned, the maximum allowable standard deduction is taken, and no other deductions/credits are applied. Single Joint Gross Income Taxable Income Income Tax Marginal Rate Average Rate Taxable Income Income Tax Marginal Rate Average Rate $40,000 $75,000 $150,000 $500,000 $1,000,000 $10,000,000
Chapter 3 Activity – Taxes
Individual Income Tax Brackets (2021)
|
Marginal Tax Rate |
Single, taxable income over: |
Joint, taxable income over: |
Head of Household, taxable income over: |
|
10% |
$0 |
$0 |
$0 |
|
12% |
$9,950 |
$19,900 |
$14,200 |
|
22% |
$40,525 |
$81,050 |
$54,200 |
|
24% |
$86,375 |
$172,750 |
$86,350 |
|
32% |
$164,925 |
$329,850 |
$164,900 |
|
35% |
$209,425 |
$418,850 |
$209,400 |
|
37% |
$523,600 |
$628,300 |
$523,600 |
Standard Deduction Amounts (2021)
|
Filing Status |
Deduction Amount |
|
Single |
$12,550 |
|
Married Filing Jointly |
$25,100 |
|
Head of Household |
$18,800 |
Long-term
|
Tax Rate |
Single |
Joint |
Head of Household |
|
0% |
Under $40,000 |
Under $80,800 |
Under $54,100 |
|
15% |
$40,400 |
$80,800 |
$54,100 |
|
20% |
$445,850 |
$501,600 |
$473,750 |
Additional 3.8% Net Investment Income Tax for MAGI over $200,000 / $250,000 / $200,000
- Calculate the federal income tax liability, marginal tax rate, and average tax rate for each of the following scenarios. Assume the following for all scenarios: all income is traditionally earned, the maximum allowable standard deduction is taken, and no other deductions/credits are applied.
|
|
Single |
Joint |
||||||
|
Gross Income |
Taxable Income |
Income Tax |
Marginal Rate |
Average Rate |
Taxable Income |
Income Tax |
Marginal Rate |
Average Rate |
|
$40,000 |
|
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|
|
|
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|
|
$75,000 |
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$150,000 |
|
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$500,000 |
|
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|
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$1,000,000 |
|
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$10,000,000 |
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