By defining after-tax income, demonstrate the differences resulting from a $1,000 tax deduction versus a $1,000...

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By defining after-tax income, demonstrate the differences resulting from a $1,000 tax deduction versus a $1,000 tax credit fo

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Answer 1

Answer #1

After tax income with tax deduction = (Pre tax income-Deduction)*(1-Tax rate)

= (30000-1000)*(1-12%)

= 25520

After tax income with tax credit = (Pre tax income)*(1-Tax rate) + Tax credit

= (30000*(1-12%)) +1000

= 27400

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Answer 2

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