Wednesday, February 15, 2012

How does contributing to 401k reduce current tax burden?

Let’s say your federal tax bracket is 25% and your state bracket is 6%. Which means your total tax bracket is 31%.
You contribute $10,000 to your 401k.
So you will save $3,100 in your total tax this year. (31% of $10,000 is $3,100)

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