EITC Problem: Single Homework 8: Problem #1.

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Presentation transcript:

EITC Problem: Single Homework 8: Problem #1

Tax Credit AGI Lower Upper Rate per $ AGI $0.00 $6,700 $0.08 $8,400 $15,050 ($0.08)

Exemptions, Deductions, and Brackets Standard Deduction $6,350 Exemptions 1 @ $ 4,050 $4,050 Total $10,400 Taxable Income starts at $10,400 AGI $0 $10,400 0% $10,401 $19,725 10% $19,726 $48,350 15%

Effective Marginal Rates Range of AGI Credit Rate Tax Rate Effective Marginal Rate $0 - $6,700 Increasing Credit -8% $6,701 - $8,400 Flat Credit 0% $8,401 - $10,400 Declining Credit No Tax 8% $10,401 - $15,050 Declining Credit with Bracket I Tax Rate 10% 18% $15,051 - $19,725 No Credit with Bracket I Tax Rate $19,726 - $48,350 Tax Bracket II Tax Rate 15%

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