Mr. and Mrs. Upton's marginal tax rate on their joint return is 32%. This year, their itemized deductions totaled $25,200, and their standard deduction (MFJ) was $24,800. Compute their incremental tax savings from their itemized deductions.

Question

Quizplus · Accepted Answer

The incremental tax savings from itemizing deductions instead of taking the standard deduction is calculated by taking the difference between the itemized deductions and the standard deduction, and then multiplying that difference by the marginal tax rate. In this case, the difference is $25,200 - $24,800 = $400. Multiplying this by their marginal tax rate of 32% gives $400 * 0.32 = $128.

Mr and Mrs