Savings and Retirement: How large are the tax expenditures for retirement saving?
Provisions in the tax code designed to encourage retirement saving cost the U.S. Treasury billions of dollars in forgone revenue each year. Provisions of this type, which reduce tax revenue for the sake of promoting other public goals, are called tax expenditures. Of all the tax expenditures in the tax code, the one allowing tax-free employer contributions to employee pension plans is the second largest, costing $108.6 billion in 2007 according to estimates by the congressional Joint Committee on Taxation. All of the retirement saving incentives in the tax code together amounted to $133.8 billion in tax expenditure in that year and $760.3 billion over five years.
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