1. EITC Problem: Single
Homework 8: Problem #1

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

3. Exemptions, Deductions, and Brackets
Standard Deduction
$6,350
Exemptions
$ 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%

4. 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%