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Arlene is single and has taxable income of $18,000. Her tax liability is currently $2,236. She has the opportunity to earn an additional $5,000 if she accepts and completes a special project at work. There are no additional expenses to offset the $5,000 income. Consequently, Arlene will have a tax liability of $2,986 if she accepts the special project. Arlene has a marginal tax rate of

Answer :

Answer:

Marginal tax rate is 0.15 or 15%

Explanation:

Given data:

Taxable income is $18000

Tax liability is $2236

Additional amount to offer is $5000

Future tax liability is $2986

we know that marginal tax rate is computed as

Marginal rate [tex]= \frac{change\ in\ tax}{change\ in taxable\ income}[/tex]

                     [tex]= \frac{2986- 2236}{5000}[/tex]

                     [tex]= \frac{750}{5000}[/tex]

Marginal tax rate is 0.15 or 15%

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