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Show Borrowing cheaper for taxpayers LOGAN If you pay income tax, money won't cost as much to borrow as quoted by the lending institution. Figure the after-tax cost as the true cost of borrowing money, advises Larry K. Bond, extension economist, Utah State University. Using the example of an income of $16,000, pond pointed out that the after-tax cost of borrowing $8,000 at 12.5 percent for one year would actually be 9.875 percent or $790 instead of $1000. The reason is you can save $210 in taxes by claiming interest as a deduction on your federal income tax. The effect on state taxes added to that would further increase the tax savings. |