Helen,who is single,is considering purchasing a residence that will provide an $18,000 tax deduction for property taxes and mortgage interest.If her marginal tax rate is 24% and her effective tax rate is 20%,what is the amount of Helen's tax savings from purchasing the residence?
A)$3,600
B)$4,320
C)$3,200
D)$18,000

Question

Quizplus · Accepted Answer

Helen's tax savings will be equal to the tax deduction multiplied by her marginal tax rate, which is $18,000 * 24% = $4,320. While her effective tax rate is 20%, it is her marginal tax rate that applies to deductible expenses such as property taxes and mortgage interest.

Helen,who Is Single,is Considering Purchasing a Residence That Will Provide