Question

A single person with a monthly taxable income of $7,000 in the 28 percent marginal tax bracket forgoes consumption and instead places $450 into a tax-sheltered retirement plan every month. What are the yearly tax savings due to these retirement contributions?

Answer 1

Step-by-step explanation:

Total amount of deposit in 1 year equals 450*12=5400

Tax savings because of this contribution = 5400*0.28=1512

So, tax savings is 1512