<prompt> Human: Making 36,000 annually. So my bracket for federal is 15.Put 5,500 of posttax money in a traditional IRA. 15 of that is 825.Now my taxable income is 30,500 and I recieve 825 back when I file for taxes.Edit: not Roth. Meant to say traditional  <response>: You are thinking along the right lines. The caveat is you will receive 825 as a refund ... only if the withholding that happened during the year took exactly the right amount of tax appropriate for someone with taxable income of 36000. Sometimes people dont have their withholding set appropriately, so more or less is withheld during the year than should have been. But you are essentially correct: the difference between your tax liability if you do not make the contribution and your tax liability if you do make the contribution will be your marginal rate amount of contribution. This simple equation would have to be slightly modified if your contribution happens to occur in such a way that you cross from high bracket into next bracket down. If you know you will be making this contribution, you can even adjust your withholding so that you get no refund at the end of the year. What would happen instead is that 825 less liability would translate into 825 less withholding being taken across the year, and thus youd see that 825 in your paychecks, divvied up across the year, say as 32 more take-home per biweekly paycheck. 