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Old 01-03-2014, 02:25 PM
samiam9 samiam9 is offline
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Join Date: Jan 2014
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Default question about how much can be saved in federal income tax

Say an individual has a marginal federal income tax rate of 25% and an average tax rate of 19%. If this person wants to lower their income by 100$ how could we find out how much they would save on federal income tax
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Old 12-15-2016, 06:25 AM
zarood zarood is offline
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Join Date: Jul 2016
Posts: 16
Default Re: question about how much can be saved in federal income tax

Many of us know the rush of the end of the financial year when we scramble to submit documents that could help reduce the income tax that needs to be paid on that year’s earnings. The most common scenario is the submission of rent receipts, and various insurances but is that the only way you can save on taxes?

If you were to take a closer look at all the instruments available to you for this purpose you’d realise that we are spoilt for choice when it comes to saving on income tax. So the very first question we need to ask is how much can you save on tax? To understand that first you need to understand the slabs.

The income tax slab is a way of categorising taxpayers based on their annual income. It has four segments where a limit is provided and income exceeding that limit is taxed at a predefined amount. The whole exercise of investing is indulged in for two main purposes and they are to create savings for the future or for a rainy day or to save on income tax.
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