Final answer:
The marginal tax rate is the rate at which the last dollar of income is taxed; for a single taxpayer with an income of $35,000, their marginal tax rate is 15%. Morris, who itemized his deductions and paid $2,000 in state taxes, received a $275 refund after filing his state tax return.
Step-by-step explanation:
Understanding Marginal Tax Rates
Marginal tax rates in the United States vary based on an individual's income, marital status, family size, and other factors. For a single taxpayer, the marginal tax rates range from 10% to 35%.
The term marginal tax rate refers to the rate of tax that applies to the last unit of income the taxpayer earns.
For example, suppose a single taxpayer earns $35,000 per year. According to the given tax brackets, income from $0 to $9,075 would be taxed at 10%, and income from $9,075 to $36,900 would be taxed at 15%.
Since this individual's income does not exceed $36,900, their marginal tax rate is 15%, meaning that if they earn one more dollar, it will be taxed at that rate.
Additionally, when individuals itemize deductions, such as property taxes or interest on home mortgages, the calculation of their adjusted gross income and taxable income becomes more complex.
In the scenario presented, Morris has itemized deductions of $12,500, which includes $2,000 for state income taxes. After filing his state income tax return, he receives a refund of $275, indicating that the actual state tax liability was less than what he initially deducted.