Melissa does not receive employer-funded health-care benefits. However, she is offered an opportunity to purchase a health-care plan for $400 per month paid out of pretax dollars. How much tax does Melissa save annually if her marginal tax rate is 24%?

Question

Quizplus · Accepted Answer

Melissa saves tax by reducing her taxable income by the amount of the health-care plan cost. The annual cost is $400 x 12 = $4,800. The tax savings is 24% of $4,800, which is $1,152.

Melissa Does Not Receive Employer-Funded Health-Care Benefits