Willy Wise participates in his employer's 401 (k) retirement plan and contributes $8,000 in the course of the year out of his $60,000 income. (His employer matches Willy's contribution dollar for dollar.) Willy's contributions are tax deductible (i. e., deducted from his taxable income) and he is in the 25% federal income tax bracket. How much less does Willy pay in federal income taxes that year compared to a co-worker who makes the same salary but does not participate in the 401 (k) plan? A. $500 B. $1000 C. $2000D. $3000E. $4000
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