Jake invested $800 in an RRSP. If he has a 15 percent marginal tax rate and the contribution is tax deductible, Jake will
A)pay $120 more in taxes.
B)pay $120 less in taxes.
C)receive an $800 tax credit.
D)have $800 more in taxable income.

Question

Quizplus · Accepted Answer

Since Jake's RRSP contribution is tax deductible, his taxable income will decrease by $800. This means he will pay $120 less in taxes (15% of $800).

Jake Invested $800 in an RRSP