Final answer:
The marginal income tax rate on a $5,000 raise for someone making $95,000 per year, according to the provided pre-TCJA tax brackets, is 28%, as the total income including the raise remains within the threshold of the 28% tax bracket. The correct answer is option d.
Step-by-step explanation:
The question pertains to determining the marginal income tax rate of a $5,000 raise for someone who currently makes $95,000 per year, using the provided pre-Tax Cuts and Jobs Act (TCJA) of 2017 federal income tax brackets. The original salary of $95,000 already places the taxpayer in the 28% tax bracket ($93,701 to $195,450). With a $5,000 raise, the new salary would be $100,000, which is still within the same tax bracket. Therefore, the marginal tax rate on the additional $5,000 is also 28%.
It is important to understand how marginal tax rates work. The taxpayer pays the specified rate only on income within that bracket's range. This is what is meant by 'moving into a higher tax bracket,' where only the income over the threshold gets taxed at the higher rate, not the entire income.