If you are paying taxes at the 35% tax bracket, you should
A) consider investing in tax free municipal bonds.
B) make the maximum tax-deductible contribution to your company 401K.
C) increase the interest expenses you pay by taking loans on expensive autos instead of paying cash.
D) Both A and B are correct.

Question

Quizplus · Accepted Answer

Investing in tax-free municipal bonds and making the maximum tax-deductible contribution to a 401K are both strategies that can help reduce taxable income and leverage the benefits of being in a higher tax bracket. Option C, increasing interest expenses by taking loans on expensive autos, is not generally advisable as a tax-saving strategy.

If You Are Paying Taxes at the 35% Tax Bracket