Question

Molly and Justin are considering contributing $5,000 to their favorite, tax deductible charity. This contribution will bring their total itemized deductions to $20,000. Assuming they are in the 28% marginal tax bracket, how much will they save in taxes by contributing this $5,000 to charity?

Answer 1

Answer:

The tax savings are $1400 for paying $5000 in charity if the marginal rate is 28%.

Explanation:

As charity is tax deductible and as given that they are in the 28% marginal tax bracket the savings for charity are given as

Tax Saving=Tax Rate x Amount for Charity

Here

• the Tax Rate is given as 28%.
• the amount for charity is $5000

So the tax savings are

Tax Saving=Tax Rate x Amount for Charity

Tax Saving=28% x 5000

Tax Saving=0.28 x 5000

Tax Saving=$1400.

So the tax savings are $1400 for paying $5000 in charity if the marginal rate is 28%.