Question

8. Katie pays $10,000 in tax-deductible property taxes. Katie’s marginal tax rate is 32%, average tax rate is 28%, and effective tax rate is 25%. Katie's tax savings from paying the property tax is

Answer 1

The Tax savings for the property tax is 3200 USD.

Step-by-step explanation:

As Katie paid property taxes as $10000 in tax-deductible property taxes. In calculation of this the marginal tax rate is used in calculation. Thus

`Tax_(savings)=Tax_(Marginal-rate) * Amount paid\\Tax_(savings)=32\% * 10,000\\Tax_(savings)=(32)/(100) * 10,000\\Tax_(savings)= \$ \, 3200\\`

So the Tax savings for the property tax is 3200 USD.