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    MsTaylor23's Avatar
    MsTaylor23 Posts: 41, Reputation: 1
    Junior Member
    		  
    #1

    Jun 6, 2007, 10:16 AM
    After Tax Cost
    If a person has a taxable income of 270,000 with an increase of 60,000 in expenses. The taxable income after the change would be 210,000. The income tax with a tax rate of 40 percent would be 84,000 and the income after the tax would be 126,000. But what would be the after cost of the increased expense?
    ebaines's Avatar
    ebaines Posts: 12,131, Reputation: 1307
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    #2

    Jun 6, 2007, 11:23 AM
    For tax-deductible expenses, the after-tax cost is: expense x (1-taxrate). In this case, $60K x (1-0.4) = $36K. This assumes that the tax rate stays at the flat 40%.
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
    		  
    #3

    Jun 7, 2007, 08:59 AM
    Agree!
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