Jorge and Anita, married taxpayers, earn $$ \$ 150,000 $$ in taxable income and $$ \$ 40,000 $$ in interest from an investment in City of Heflin bonds. (Use the U.S. tax rate schedule for married filing jointly.) Required: a. If Jorge and Anita earn an additional $$ \$ 100,000 $$ of taxable income, what is their marginal tax rate on this income? b. What is their marginal rate if, instead, they report an additional $$ \$ 100,000 $$ in deductions? Note: For all requirements, round your answers to 2 decimal places.

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To solve this problem, we need to determine Jorge and Anita's marginal tax rate based on their taxable income and the U.S. tax rate schedule for married filing jointly.

### Known Conditions:
- Current taxable income: $$ \$150,000 $$
- Interest from City of Heflin bonds: $$ \$40,000 $$ (this is tax-exempt)
- Additional taxable income: $$ \$100,000 $$
- Additional deductions: $$ \$100,000 $$

### Step-by-Step Solution:

#### a. Marginal Tax Rate on Additional Taxable Income

1. **Determine the new taxable income**:
   $$
   \text{New Taxable Income} = 150,000 + 100,000 = 250,000
   $$

2. **Identify the tax brackets for married filing jointly** (for the year 2023):
   - 10% on income up to $$ \$22,000 $$
   - 12% on income over $$ \$22,000 $$ up to $$ \$89,450 $$
   - 22% on income over $$ \$89,450 $$ up to $$ \$190,750 $$
   - 24% on income over $$ \$190,750 $$ up to $$ \$364,200 $$
   - 32% on income over $$ \$364,200 $$ up to $$ \$462,500 $$
   - 35% on income over $$ \$462,500 $$
   - 37% on income over $$ \$622,050 $$

3. **Determine the marginal tax rate**:
   - The current taxable income of $$ \$150,000 $$ falls into the 22% bracket.
   - The new taxable income of $$ \$250,000 $$ falls into the 24% bracket.
   - Therefore, the marginal tax rate on the additional $$ \$100,000 $$ of taxable income is **24%**.

#### b. Marginal Tax Rate on Additional Deductions

1. **Determine the new taxable income with deductions**:
   $$
   \text{New Taxable Income} = 150,000 - 100,000 = 50,000
   $$

2. **Identify the tax brackets**:
   - The new taxable income of $$ \$50,000 $$ falls into the 12% bracket.

3. **Determine the marginal tax rate**:
   - Since the taxable income is now $$ \$50,000 $$, any additional deductions will not change the marginal tax rate because they are already in the 12% bracket.
   - Therefore, the marginal tax rate on the additional $$ \$100,000 $$ in deductions is **12%**.

### Final Answers:
- a. Marginal tax rate on additional taxable income: **24.00%**
- b. Marginal tax rate on additional deductions: **12.00%**
- a. The marginal tax rate on the additional \$100,000 of taxable income is **24.00%**. - b. The marginal tax rate on the additional \$100,000 in deductions is **12.00%**.

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