Say you have a tax-deferred investment such as an IRA and you want to know how much you save (in taxes) as a result of your investment. The math is very simple: Multiply the amount of the investment by your tax bracket.
For round number purposes we'll assume your IRA investment is $5,000 and your tax bracket is 25%. Given that 5,000 x .25= 1,250, applying this to the earlier scenario means that you will save $1,250 in taxes.
Another way to look at this is by saying that you really spent $3,750 on a $5,000 investment which will keep on growing.
For round number purposes we'll assume your IRA investment is $5,000 and your tax bracket is 25%. Given that 5,000 x .25= 1,250, applying this to the earlier scenario means that you will save $1,250 in taxes.
Another way to look at this is by saying that you really spent $3,750 on a $5,000 investment which will keep on growing.
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