Question

A city property tax bill of $5,000 for a person in the 25% tax bracket results in:

A. a federal income tax savings of $1,250 for the taxpayer

B. a reduction of $5,000 in taxable income for the taxpayer


C. an extra $1,250 for the federal government

Answer 1

Answer: I may be wrong but I think b

Step-by-step explanation:

Answer 2

Explanation: The right answer is A, which represents a taxpayer savings of $1,250 in federal income taxes.

A taxpayer in the 25% tax rate can deduct $5,000 of their property tax payments from their taxable income. As a result, their taxable income is decreased by $5,000. The deduction amount multiplied by the taxpayer's marginal tax rate of 25% results in the amount of federal income tax that is avoided as a result of this deduction. So, the taxpayer saves $1,250 in federal income taxes.