In the 28% marginal tax bracket,a $1,000 tax-deductible contribution to a pension account will reduce your taxes in the year of the contribution by

Question

Quizplus · Accepted Answer

A $1,000 tax-deductible contribution will reduce your taxable income by $1,000. At a 28% marginal tax rate, this will result in a tax savings of 28% of $1,000, which is $280. Therefore, the best choice is B, as it correctly identifies the tax savings that will result from the contribution.

In the 28% Marginal Tax Bracket,a $1,000 Tax-Deductible Contribution to a Pension