Final answer:
The correct response is that only the income within the new tax bracket (24%) will be taxed at the higher rate (D), due to the nature of the progressive tax system.
Step-by-step explanation:
The correct statement regarding Marcus and Lydia Brown's taxable income and the impact of Lydia's job promotion is D) Only the income within the new tax bracket (24%) will be taxed at the higher rate. This is due to the U.S. having a progressive tax system, where tax rates increase as income rises within specified ranges known as tax brackets. When an individual or household's income moves into a higher tax bracket, only the income that falls within that higher bracket is taxed at the new, higher tax rate, not the entire income.
For example, if a single taxpayer earns $35,000, and we suppose that income from $0 to $9,075 is taxed at 10%, and income from $9,075 to $36,900 at 15%, this person's marginal tax rate would be 15%. Therefore, they're only taxed 15% on the income earned above $9,075 and up to the total amount they earn, which in this case is $35,000. Similarly, for Marcus and Lydia Brown, if their combined taxable income is $174,000 and due to Lydia's new promotion part of this income is now in the 24% tax bracket, only that portion of income in the 24% bracket will be taxed at that rate.