What is the after tax cost of the deductions for the following question?
Simon’s marginal tax rate is 28%. If Simon can increase his tax deductions by ,000 at the end of the year, what is his after tax cost of the deducti...
Simon’s marginal tax rate is 28%. If Simon can increase his tax deductions by ,000 at the end of the year, what is his after tax cost of the deductions?
His cost is 28% or less than the original amount. It depends upon how close to the bracket threshold he is. If he’s only $1 into the 28% bracket, all but $1 of it will be at the 25% bracket and the savings would therefore be a hair over 25%.