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Author: IndecisiveFool Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76112  
Subject: Re: 401k vs. take home pay Date: 1/6/2003 2:08 PM
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I believe that it does. If you are making $35,000 and manage to sock away $11,000 into a 401(k), so that your taxable income is only $24,000, this may very well drop you into a lower tax bracket (don't know the tax schedule off the top of my head).

JAFO is correct. When your income goes from a lower bracket to a higher bracket, only the portion of income above the income limit of the lower bracket is taxed at the higher rate, not the entire income.

IF

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