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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

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Answer:

The Tax savings for the property tax is 3200 USD.

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

                          [tex]Tax_{savings}=Tax_{Marginal-rate} \times Amount paid\\Tax_{savings}=32\% \times 10,000\\Tax_{savings}=\frac{32}{100} \times 10,000\\Tax_{savings}= \$ \, 3200\\[/tex]

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

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