how much does ira reduce taxes
Once you find your highest tax bracket, called your marginal tax rate, multiply it by the amount of money you contributed to your traditional IRA. Thatâs how much a traditional IRA reduces your income tax. For instance, suppose you contributed $4,000 and your marginal tax rate is 25 percent. Multiply 25 percent times $4,000 to get $1,000. Those thousand bucks are your traditional IRA tax savings.