Problem
I. What is the difference between the marginal and the average income tax rates?
II. Nyla has $5,000 in medical expenses and an adjusted gross income of $10,800. If taxpayers are allowed to deduct the amount of medical expenses that exceed 10 percent of adjusted gross income, what would be the amount of the deduction Nyla can take?
III. Nyla is in the 10% marginal tax rate, the 9% average tax rate, and her taxable income is $12,000 before receiving her annual bonus. What will the following be if she receives a year-end bonus of $1,000?
i. Tax on the bonus
ii. Average tax rate after the bonus.