Question

MaryBeth is considering accepting some additional contract work. She is trying to evaluate whether the compensation for the job is worth the effort.

Which tax rate should she use to calculate her after-tax proceeds of accepting the job?

Answer 1

Marginal tax rate

Step-by-step explanation:

Marginal tax rate is the rate of tax that is assessed on an additional increment of income. Since MaryBeth has a contract job but wants to take on more, she has to consider what her after marginal tax rate profit will be as the additional job will is bringing in additional increment in income.

To calculate marginal tax, MaryBeth has to find the tax rate on the additional income from and find its percentage in the differnece between the incomes.

Cheers.