Final answer:
To determine tax liability, one applies the tax rate schedules to find the appropriate income bracket and calculates the base tax plus a percentage of income above the lower threshold. The progressive tax system means rates increase with higher income. Marginal tax rate refers to the tax rate on the highest dollar of income.
Step-by-step explanation:
The question concerns determining the tax liability for different taxpayers using the Tax Rate Schedules. The rates are progressive, meaning they increase with higher income levels and vary based on factors such as marital status and family size. To calculate the tax liability, locate the taxpayer's income within the relevant brackets, apply the base amount of tax from the lower income limit of that bracket, and then add the appropriate percentage of the amount by which the taxpayer's income exceeds the lower limit.
For example, a married couple filing jointly with a taxable income of $97,463 will fall into a specific bracket where a base amount is taxed up to the lower limit, and then a certain percentage is applied to the remainder. Similarly, for a single taxpayer with a taxable income of $66,829, one must find the appropriate tax bracket and calculate according to the specified rates for that range.
The marginal tax rate is applied to the highest dollar of income. For instance, if the applicable tax rates were 10% for income up to $9,075, 15% for income from $9,075 to $36,900, and 25% for income above $36,900, a single taxpayer earning $35,000 would face a marginal tax rate of 15% on their top dollars of income. This rate provides an estimate of how much tax they owe for every additional dollar earned.