Final answer:
Chuck's taxable income is $77,000 as City of Heflin bond interest is likely tax-exempt. His tax liability would be calculated based on the provided tax brackets and rates. The tax-exempt bonds do not impact his tax rate but provide additional non-taxable income, benefitting his overall financial situation.
Step-by-step explanation:
Calculating Chuck's Taxable Income and Tax Liability
To calculate Chuck's total taxable income, we only consider his earnings that are subject to tax. Since interest from City of Heflin bonds is likely tax-exempt, Chuck's taxable income remains at $77,000. To determine his tax liability, we need to refer to the appropriate tax rate schedule and apply it to his taxable income. Without the exact tax tables for the relevant year, we apply a hypothetical rate based on your explanations: if Chuck's income is taxed at 10% for the first $9,075, 15% from $9,075 to $36,900, and 25% beyond $36,900.
The calculation method is similar to the example provided: Chuck's tax would be a base amount for the initial bracket plus 15% of the income over $9,075 and up to $36,900, then 25% of the income over that, up to his taxable income.
Assessing the impact of the City of Heflin bonds on Chuck's tax rate, we can see that it does not directly affect his tax rate because this type of interest income is often tax-free. However, it does benefit Chuck by providing him with additional income that is not taxed.
To calculate Chuck's net income after taxes, we subtract his tax liability from his total earnings (including the tax-free bond interest). If we had his exact tax payable amount, we would deduct that from his $77,000 taxable income and then add the $12,100 bond interest to find his net income after taxes.