Question

Assuming that Dave’s marginal tax bracket is 25%, but how much did his federal taxes declined this year if he contribute 7000 to his retirement account?

Answer 1

The marginal tax bracket of Dave shows that the amount of the federal tax is $28000.

How to compute the tax?

Let the federal tax be represented by x.

From the information, Dave’s marginal tax bracket is 25%, and he contributed 7000.

Based on the information, the amount will be:

25% of x = 7000

0.25 × x = 7000

0.25x = 7000

x = 7000/0.25

x = $28000

In conclusion, the amount is $28000.

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