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20 June, 04:10

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?

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  1. 20 June, 04:29
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    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
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