Quiz: Tax Basics 5 questions · 80% to pass 1. What does a 'marginal tax rate' refer to?The average rate you pay on all your incomeThe tax rate applied to your last dollar of incomeThe maximum tax rate in the countryThe rate you pay on capital gainsYour marginal tax rate is the rate applied to your last (highest) dollar of income. In a progressive system, this is the rate for the bracket your top income falls into.2. If a single filer earns $60,000, why is their effective tax rate lower than 22%?They qualify for special exemptionsOnly income above certain thresholds is taxed at each bracket rateState taxes offset federal taxesEmployers pay part of the taxIn a progressive system, the first portion of income is taxed at 10%, the next portion at 12%, and only income above $47,150 is taxed at 22%. The blended result is a lower effective rate.3. What additional tax do 1099 contractors pay that W-2 employees do not?Alternative minimum taxCapital gains taxSelf-employment tax (15.3%)Estate tax1099 workers pay self-employment tax of 15.3%, covering both the employee and employer portions of Social Security (12.4%) and Medicare (2.9%).4. For 2024, what is the standard deduction for a single filer?$7,500$12,950$14,600$29,200The 2024 standard deduction for single filers is $14,600. Married filing jointly is $29,200.5. How does a $1,000 tax credit compare to a $1,000 tax deduction for someone in the 22% bracket?They save the same amountThe deduction saves moreThe credit saves $1,000 while the deduction saves $220The credit saves $220 while the deduction saves $1,000A tax credit reduces your tax bill dollar for dollar ($1,000 saved). A deduction reduces taxable income, so in the 22% bracket it saves 22% of $1,000 = $220. Check answers Retake quiz Back to lesson Back to track →