how much will ira contribution reduce taxes
In turn, your tax bill is reduced proportionately by your marginal tax rate. For example, if you contribute $5,000 and you are in the 25 percent tax bracket, the deduction produces a bottom-line savings of $1,250.lthough the IRS limits the annual contribution amount to $5,000 -- or $6,000 for anyone 50 or older -- you canât contribute more than you earn in a year. For example, if you were mostly unemployed and you received $3,500 in wages for the year, you couldnât contribute $4,000.