Question: 1. Each year, the Internal Revenue Service adjusts the value of an exemption based on inflation (and rounds to the nearest $50). If the exemption in a recent year was worth $3,950 and inflation was 1.2 percent, what would be the amount of the exemption for the upcoming tax year?
2. Reginald Sims deposits $2,500 each year in a tax-deferred retirement account. If he is in a 28 percent tax bracket, by what amount would his tax be reduced over a 20-year time period?