(Table: IRA Contributions) The table shows the marginal income tax rate for four individuals and the annual contribution they make to their respective IRAs. Which woman has the smallest decrease in after-tax income after making her IRA contribution? $$\begin{array} { | l | l | l | l | l | }
\hline & \text { Mary } & \text { Kathleen } & \text { Isabelle } & \text { Patricia } \
\hline \begin{array} { l }
\text { Marginal income } \
\text { tax rate }
\end{array} & 30 \% & 25 \% & 40 \% & 35 \% \
\hline \text { IRA contribution } & \$ 3,000 & \$ 3,200 & \$ 2,000 & \$ 2,500 \
\hline
\end{array}$$
A) Mary
B) Kathleen
C) Isabelle
D) Patricia

Question

(Table: IRA Contributions) The table shows the marginal income tax rate for four individuals and the annual contribution they make to their respective IRAs. Which woman has the smallest decrease in after-tax income after making her IRA contribution? $$\begin{array} { | l | l | l | l | l | } 
\hline & \text { Mary } & \text { Kathleen } & \text { Isabelle } & \text { Patricia } \
\hline \begin{array} { l } 
\text { Marginal income } \
\text { tax rate }
\end{array} & 30 \% & 25 \% & 40 \% & 35 \% \
\hline \text { IRA contribution } & \$ 3,000 & \$ 3,200 & \$ 2,000 & \$ 2,500 \
\hline
\end{array}$$
A) Mary
B) Kathleen
C) Isabelle
D) Patricia

Quizplus · Accepted Answer

Isabelle has the smallest decrease in after-tax income because she has the lowest IRA contribution amount of $2,000, and her marginal tax rate is 40%, which means she gets the largest tax deduction relative to her contribution.

(Table: IRA Contributions) the Table Shows the Marginal Income Tax