Anita contributes 5% of her salary to her employer's qualified retirement plan. If she earns a gross salary of $60,000 and her marginal tax rate is 24%, how much federal income tax is she saving?

Question

Quizplus · Accepted Answer

Anita contributes 5% of $60,000, which is $3,000, to her retirement plan. This contribution reduces her taxable income by $3,000. With a marginal tax rate of 24%, her tax savings is 24% of $3,000, which is $720.

Anita Contributes 5% of Her Salary to Her Employer's Qualified