tax bracket question...

[jinduy]

salary range tax you pay
$30,650 $74,200 $4,220.00 plus 25% of the amount over 30,650
$74,200 $154,800 $15,107.50 plus 28% of the amount over 74,200

what gets me the most is the $4k vs $15k figure... won't someone who makes 74,000 make way more in net income than someone who makes 75k (gross)? like about 10k more.

 

[FoBoT]

?
you pay on your taxable income, not gross or net

 

[Queasy]

Welcome to our progressive income tax and why people bend over backwards to reduce their taxable income.

 

[BigJ]

Originally posted by: jinduy
salary range tax you pay
$30,650 $74,200 $4,220.00 plus 25% of the amount over 30,650
$74,200 $154,800 $15,107.50 plus 28% of the amount over 74,200

what gets me the most is the $4k vs $15k figure... won't someone who makes 74,000 make way more in net income than someone who makes 75k (gross)? like about 10k more.

It would help if you did the math:

A) Person making 74k

Taxed $4,220 lump.
Then taxed 25% on ($74,000-$30,650 = $43,350) = $10,837.50

Total taxes: $15057.50

B) Person making $75,000

Taxed $15,107.50 lump.

Taxed 28% on $800 = $224

Total taxes: $15331.50

C) Difference = $274.

 

[DaveSimmons]

Originally posted by: jinduy
salary range tax you pay
$30,650 $74,200 $4,220.00 plus 25% of the amount over 30,650
$74,200 $154,800 $15,107.50 plus 28% of the amount over 74,200

what gets me the most is the $4k vs $15k figure... won't someone who makes 74,000 make way more in net income than someone who makes 75k (gross)? like about 10k more.

No. Like BigJ beat me to posting:

$74,000 income, taxes = $4,220 + $10,837 = $15,057. Net is $58,943
$75,000 income, taxes = $15,107 + $ 224 = $15,331. Net is $59,669

It's an urban legend that someone can "lose money from a salary increase" from straight tax table federal taxes, though it might happen from something like losing welfare or the Alternative Minimum Tax over $100K.

 

[kranky]

Originally posted by: DaveSimmons
It's an urban legend that someone can "lose money from a salary increase" from straight tax table federal taxes, though it might happen from something like losing welfare or the Alternative Minimum Tax over $100K.

I had a guy on another board post that he lost money every time he got a raise because of taxes, and when I said that was impossible, he said that he had been working for 30 years and knew what he was talking about.

All I did was ask where in the US do combined federal, state and local income tax rates total over 100%.

 

[DaveSimmons]

All I did was ask where in the US do combined federal, state and local income tax rates total over 100%.

exactly. Higher tax brackets only apply to the "exta money" after an increase, not to the "old money" a person was already making.

 

[chuckywang]

Originally posted by: jinduy
salary range tax you pay
$30,650 $74,200 $4,220.00 plus 25% of the amount over 30,650
$74,200 $154,800 $15,107.50 plus 28% of the amount over 74,200

what gets me the most is the $4k vs $15k figure... won't someone who makes 74,000 make way more in net income than someone who makes 75k (gross)? like about 10k more.

If you made $74,200, you would pay $4,220 + .25*($74,200-$30,650) = $15,107.50 in taxes. That number look familiar? If you graph income vs. taxes, you would see that the graph is continuous.

 

[Jadow]

people are stupid.

your tax bracket is the tax you pay on your last dollar earned, not the percent you pay on all dollars earned.

 

[jinduy]

ok makes perfect sense... thanks

 

[jinduy]

reason i ask is b/c i have friends who make 6 figures who say after getting taxed so much they dont make very much more than i do.

 

[Ns1]

Originally posted by: jinduy
reason i ask is b/c i have friends who make 6 figures who say after getting taxed so much they dont make very much more than i do.

it's probably the ridiculous amounts of money that they have skimmed from each paycheck going into investments

 

[Dunbar]

Originally posted by: jinduy
reason i ask is b/c i have friends who make 6 figures who say after getting taxed so much they dont make very much more than i do.

What their trying to say is for every extra dollar they make over what you do they may only be taking home 40-50 cents after taxes. Make no mistake though, their monthly paycheck is much higher than yours.

 

[Jadow]

Originally posted by: NeuroSynapsis

Originally posted by: jinduy
reason i ask is b/c i have friends who make 6 figures who say after getting taxed so much they dont make very much more than i do.

it's probably the ridiculous amounts of money that they have skimmed from each paycheck going into investments

QFT. I make $30,000 per year more than I did 4 years ago, however because of increased 401k and taxes, my net paycheck isn't a hell of a lot bigger than it was then.

 

[her209]

EXCEPT FOR FICA TAX. FUCK FICA!!!

 

[alkemyst]

People that make a lot of money tend to also make claims they really don't make a lot of money....they will use the people they are talking to.

I had a boss that said he didn't make much more than any of the team and that he wishes he wasn't so strapped either (when talking promotions/bumps usually). Our non-management salaries were set ranges. Some management was listed, but at his level it was really bonus driven and not listed.

Someone saw his W2 on his desk one day. He made more than the top 4 combined on the team.

After it was found out I soon quit as it was apparent he wasn't batting for us.

 

[alkemyst]

Originally posted by: Jadow

Originally posted by: NeuroSynapsis

Originally posted by: jinduy
reason i ask is b/c i have friends who make 6 figures who say after getting taxed so much they dont make very much more than i do.

it's probably the ridiculous amounts of money that they have skimmed from each paycheck going into investments

QFT. I make $30,000 per year more than I did 4 years ago, however because of increased 401k and taxes, my net paycheck isn't a hell of a lot bigger than it was then.

dude 401K is income though. Your net paycheck can be a lot different based on where you are putting your INCOME.

I don't think you are confused on this, but I have been in a discussion where the 'rich guy' in the crowd insisted his 401K was not income citing he could lose it all if the portfolio tanks, he equated it to playing the lottery.