What % of your gross monthly income goes to state+fed taxes?

[brianmanahan]

federal: %16
state: %2.8
cities (work and residential): %2

should be less this year because i switched to a HDHP and am maxing an HSA

 

[Dr. Detroit]

I suspect the burden rate of many people is far lower than what they are reporting. I've had people tell me that they pay 40% in payroll and income taxes (not sales, not property, etc....actual income and payroll taxes). When I took their real paid taxes and divided by their income, not a single person in the group paid over 19% effective rate.

Per my Turbo Tax - I paid roughly 43% to Fed & State. And by roughly I mean 42.7%.

When you get into higher tax brackets - the 35% & 39.6% one - The Feds take away almost all of you deductions.

http://www.irs.gov/publications/p17/ch29.html

Enjoy the read!

 

[dave_the_nerd]

I really shouldn't be surprised given how financially clueless a lot of people are. It's all laid out on the last or second last page of tax returns on Canada showing the final calculation of your taxes due.

Oh, it's laid in ours too. The mighty and powerful 1040i.pdf.

The problem is that everybody does their taxes with the damn computer now, or somebody else does it for them. I learned a lot about tax rules doing mine by hand.

 

[Engineer]

Per my Turbo Tax - I paid roughly 43% to Fed & State. And by roughly I mean 42.7%.

When you get into higher tax brackets - the 35% & 39.6% one - The Feds take away almost all of you deductions.

http://www.irs.gov/publications/p17/ch29.html

Enjoy the read!

I understand how it works. Most people look at a marginal rate and say "I'm paying XX%" where XX% is the marginal rate. I still suspect that my statement is correct.

 

[Mai72]

I read that 3-4 months of a middle class person's pay goes to taxes.

So basically from Jan-April your pay is going to taxes.

Don't think that you're out of the woods if you make more money. The US government is just going to take more of it.

 

[Dr. Detroit]

I understand how it works. Most people look at a marginal rate and say "I'm paying XX%" where XX% is the marginal rate. I still suspect that my statement is correct.

Agreed - most of these folks just assume 25% because their last thousand in earnings hit the 25% bracket.

 

[Dr. Detroit]

I read that 3-4 months of a middle class person's pay goes to taxes.

So basically from Jan-April your pay is going to taxes.

Don't think that you're out of the woods if you make more money. The US government is just going to take more of it.

It's called Tax Freedom Day - April 21, 2014 for this year.

http://en.wikipedia.org/wiki/Tax_Freedom_Day

 

[CLite]

I realized I forgot to include a personal exemption ($3950) for the 89k theoretical case. The 89k income with standard deduction and personal exemption (6100 + 3950) brings the tax bill down to $15,593.75 or 17.52% versus a bracket of 25%. If he/she contributed to 401k, paid for employee healthcare, or had more exemptions it would be lower.

Between my wife and I we have: mortgage interest, property tax, state tax, healthcare, 401k, 3 exemptions (including child), Dependent Care FSA, regular FSA. All of this totals to $75,779 worth of deductions/exemptions/pre-tax off the federal taxable income. Even though we hit a bit of AMT we still aren't higher than 17% effective federal tax rate.

Tax code seems kind of dumb if we can pay less effective federal tax % than someone with significantly less income. The tax code could probably use simplifying by eliminating 401k/FSA/mortgage interest benefits to pre-tax/deductions.

 

[Mai72]

It's called Tax Freedom Day - April 21, 2014 for this year.

http://en.wikipedia.org/wiki/Tax_Freedom_Day

Thanks for the link. I didn't even know this existed.

 

[CLite]

Per my Turbo Tax - I paid roughly 43% to Fed & State. And by roughly I mean 42.7%.

When you get into higher tax brackets - the 35% & 39.6% one - The Feds take away almost all of you deductions.

http://www.irs.gov/publications/p17/ch29.html

Enjoy the read!

The turbo tax effective tax rate doesn't include pre-tax items. It equals TAX/AGI, but AGI ignores 401k/healthcare and other pre-tax items (a lot of box 12 items on your w-2). The OP wasn't particularly clear so AGI is fine to use I suppose, but gross pay seems more appropriate.

 

[brianmanahan]

threads like this make me feel like a failure

 

[zCypher]

Depends how you calculate it. When I look at my pay, I see a certain number for federal and provincial tax. Then there is a swathe of other deductions. From gross to net, total deductions are very close to 50%. But probably only about half of that is actual "income tax". And I usually structure things in such a way that I still get money back at the end of the year due to various contributions made to tax sheltered things that reduce taxable income. If you aren't maxing out the available venues to reduce taxable income, then you're doing it wrong.

 

[Red Squirrel]

Isn't the Federal deductible like $9k?

If you're assuming $5k is union dues, I'm assuming you don't have ANY form of alternative income (e.g. interest from a bank account) and don't buy RRSPs.

Hmmm RRSPs might be included in that too though I buy them through my bank and not through work so not sure if those would be calculated in there, I know there's a whole whack of stuff that also comes off the pay too so probably in there too. I don't think union dues are that expensive so it's definitely not just that.

 

[SSSnail]

About 146%.

 

[Fenixgoon]

25% total i think

 

[iGas]

I'm in the 29% federal and 14.7% provincial for an effective tax bracket of 43.7% combine.
Total deductions including health + pension (not including RRSP) = 52.9%
Take home is a paltry 47.1% after deductions and taxes D: