Assuming Reginald Worthington pays 40 percent in income taxes and contributes $100,000 to a not-for-profit hospital, what will his tax bill be?

To understand how Reginald Worthington's contribution to a not-for-profit hospital affects his tax bill, one must consider the tax implications of charitable contributions under tax law. When an individual contributes to a not-for-profit organization, they may be eligible for a charitable deduction on their income tax return.

In this case, Reginald contributes $100,000 to the hospital. Since he pays 40 percent in income taxes, we can analyze how the contribution impacts his overall tax liability.

1. First, calculate the reduced taxable income due to the contribution. By donating $100,000, Reginald can deduct this amount from his income, thereby lowering the amount of income subject to tax.

2. To identify how much tax he saves due to the deduction, multiply his deduction amount by his tax rate:

[

Tax Savings = Contribution \times Tax Rate = 100,000 \times 0.40 = 40,000.

]

3. This amount represents the reduction in his tax bill because of the charitable contribution.

Therefore, the total tax due isn't simply calculated on his original income—it's adjusted by the amount of tax saved from the deduction. To determine the impact on his tax bill as a total amount,