Helen, who is single, is considering purchasing a residence that will provide an $18,000 tax deduction for property taxes and mortgage interest. If her marginal tax rate is 24% and her effective tax rate is 20%, what is the amount of Helen's tax savings from purchasing the residence?

amount of tax saving is $4320

Explanation:

given data

tax deduction = $18000

marginal tax rate = 24%

effective tax rate = 20%

to find out

amount of tax saving

solution

we know tax saving formula that is

tax saving = tax deduction * marginal tax ... 1

so now put here all value in equation 1

tax saving = tax deduction * marginal tax

tax saving = 18000 * 24%

tax saving = 18000 * 0.24

tax saving = 4320

so amount of tax saving is $4320