So let's say there is a company ABC:

It's LIFO reserves are 500 and 400 in 2018 and 2019 respectively.

And the tax rate for 2019 is 10% and 8% for 2018.

The question is: What is the cumulative amount of income tax savings of ABC through 2019 by using LIFO instead of FIFO?

I have the answer, it's [500*8% - (500-400)*10%].

But I was wondering how the Answer is not just 400*10%? How is the previous year tax saving related to this year?