Increase Your Income and Save More Taxes: A Step Towards Financial Freedom

How can you increase your income and save more on taxes?

Imagine a scenario where your income is increased by $4800 and your tax rate decreases from 12% to 10%, but your payable tax remains the same. If in both conditions 20% of the income is tax-free, how can you calculate your current income?

Calculating Your Current Income with Increased Income and Reduced Tax Rate

To determine your current income after the increase and tax rate reduction, you need to consider the following:

Let's denote the original income as I. The original tax payable is 80% of the taxable income multiplied by the original tax rate of 12%. With the increase of $4800 in income and a reduction in tax rate to 10%, the new tax payable is 80% of the taxable income at the new rate.

Given the condition that the payable tax remains the same in both scenarios, we can set up the following equation:

0.8*0.12*I = 0.8*0.1*(I + 4800)

Solving the equation, we find that the original income was $24000.

Therefore, with the increase of $4800 and the reduced tax rate, the current income is $28800.

By increasing your income and taking advantage of tax breaks, you can work towards building financial stability and achieving your financial goals. Make informed decisions about your finances and plan strategically to secure a strong financial future.