Dang Nguyen currently makes $30,000 per year and is in a 25% tax bracket. If he contributes $2,400 to his 401K plan at work, by how much will this lower his taxable income?

Question

Quizplus · Accepted Answer

Contributions to a 401K plan are made with pre-tax dollars, which means they reduce the taxable income by the amount contributed. Therefore, Dang Nguyen's taxable income will be lowered by the full amount of his contribution, which is $2,400.

Dang Nguyen Currently Makes $30,000 Per Year and Is in a 25