Assume your gross income is 55k a year. is there a chart that shows what your net income will most likely be? i know it varies based on state/county/city but the tax differences between those are minor. Plus you have the taxes on your net income (sales tax, new car tax, capital gains tax, property tax, etc).
But im just looking for charts showing gross income and net (post deduction taxes) income.
I doubt you’re going to find what you’re looking for. But it isn’t very hard for you to figure it out for yourself.
The tax tables in the back of the 1040 instructions give the federal bite from your AGI for values from zero to $100K/yr. That’s as close as you’re likely to get except from some tax protest source where you can’t trust the figures.
Because of the huge potential differences in deductions, it isn’t generally possible to say “$55K gross will pay $18K (or whatever) in federal taxes.” For $55K gross, the AGI could be zero or it could be about $50K, depending on your deductions.
As to state/county/city income taxes, those vary from zero to about 10% of income dcepending on where you live. That’s a non-trivial impact on your post-tax bottom line.
As to sales tax, personal property tax, real estate tax, etc., those taxes depend entirely on your lifestyle.
If you earn $55K/yr and rent an apartment/house, never eat out, own one set of clothes, take the bus to work, and save the rest, then your tax expenses after income tax would be approximately zero.
OTOH, if you always eat out, buy a new car often and lots of new clothes & other consumer stuff, save nothing, and spend very little on housing or groceries (live with parents?), then virtually 100% of your take-home pay would be subject to sales tax.
Those two extreme scenarios give a 6-9% difference in tax bite depending on locale.
If you just want a worst-case number, that’s not too hard. Let’s assume 100% of the income is ordinary W2 wages from a job or jobs, or from simple investments (buy-and-hold mutual funds, bank accounts, etc) and that you’re single. You rent your living quarters or own a small condo/house with a small mortgage.
Now we’ve covered federal tax bite.
Subtract 0%, 5%, or 10% from step 4’s value for state tax. Use 0% if your state has no income tax, 10% if you live in NY, CA, or one the the other extra-heavy tax states, 5% otherwise.
Subtract 5% from step 5’s result for all other taxes (sales, real estate, personal property, etc.). 5% is a wag because although most tax rates are higher, not all of the money you earn will be spent in taxable transactions.
That’s the bottom line.
For $55K gross in a typical state tax situation that becomes:
Taa-Daa. 42% in taxes, 58% for you.
OTOH, if we eliminated all the taxes you’d get a bill every month from the Highway Dept (fed and state), the Army, the Police Dept (state and local), the Fire Dept, the FBI, the Attorney General (Fed and state, plus the local DA), the Bureau of Prisons, the EPA, the FAA, the FDA, the Consumer Affairs bureau, the Forestry Service, the Coast Guard, etc.
It’s kinda convenient to be able to pay all those bills with just a couple of (big) checks. Think of all the postage you save this way.
You can also see it’d be easy to create a spreadsheet for each step except the Fed tax table. Fortunately there’s also a formula for computing the tax, so you could put that into the spreadsheet easily enough. See page 74 of the 2003 IRS 1040 instructions for details.
Once you’ve built the spreadsheet you can make the table you’re looking for.
Also, as I said, that is pretty much worst case. If you’re married and/or have kids and/or have a big mortgage and/or lots of investment income or losses and/or you’re self-employed and/or … well then the tax bite is somewhat less.
And, because Fed income taxes are progressive, the bite is worse as a percentage as you make more, and less if you make less. The same is true of state income taxes, which I ignored. You can fudge that by adding/subtracting 1% for incomes below $20K or above $100K.
And let’s remember, you do want that raise. The people who moan that it will put you into a higher tax bracket? Well, if you make $1 more than the threshold of a higher tax bracket, only that dollar is taxed at a higher rate. (This, at least, is the aim.)
True.
However, years ago the buckets used in the witholding tables were pretty large, so it was possible for a raise to bump you into the next higher witholding bracket and your take home pay would actually drop.
You got a much larger refund at tax time and only paid slightly more tax on the marginal income, so it all washed out correctly, but it sure looked awful on payday.
Nowadays the witholding tables use small buckets and most payroll programs use continuously varying formulas that avoid this pitfall.
But that artifact from the 1960s remains urban legend today. I like it when my co-workers don’t want a raise due to fears about tax brackets; it leaves more for me.
It’s also not uncommon for a bonus or other one-time payment to be eaten alive by extra taxes, resulting in only a tiny increase in take home pay for that one paycheck. The law requires the employer to essentially assume you’ll be paid that same bonus every payday for the rest of the year and compute the witholding on that one check for your new and much improved income.
IF you’re right near a tax-bracket cutoff, or the bonus is big compared to your normal pay for the period, the tax hit can be huge. Folks used to seeing the Feds take 20% might see 40% of their check swallowed up. Youch.
This page at the IRS has taxation reports broken down by income. I think you want table 1.1, but I can’t find any numbers for amount per return, just total amount and total returns.
I remember telling my father that my teacher said she took less home after a raise. He explained tome how that was impossible and that was the beginning of my loss of respect for the educational system.
Tons of errors here. State income tax is deductible from your gross income for Federal tax purposes, but FICA is not. Plus your math is all wrong. Bottom line is taxes on $55,000 income including FICA, Fed Tax and 5% state tax comes to $14,583 or 26.52%
Not sure if you can deduct state income tax in this case because the std deduction is likely more than the itemized deductions would be. In that case the tax is $15,183.50 or 27.61%.
One problem with the calculation is the 7.65% take from FICA as shown above is not deductible for federal tax purposes (and I believe only Alabama allows such a deduction for state purposes).
Thus, $4208 is paid first. Then federal and state tax applies to the $55,000 less deductions, not $50,792.
Thus, $55,000 - 7,800 = $47,200 = $19,275 (2003 single ind. tax)
For state purposes, the standard deduction is usually far less than federal, so let’s say half (which I think is still too high).
Thus, $55,000 - 3,600 = $51,400 @ 5% = $2,570 (only two or three states allow a deduction for federal tax, usually limited to half the federal tax).
So, after making $55,000 less FICA of $4,208 less federal tax of $19,275 less estimated state tax of $2,570, you have $28,947. Applying the estimated sales tax, etc. of 5% to that ($1,447) you have $27,500, or 50% left, not 58%.
I could also go into detail about how the prices of the goods and service we purchase with our remaining $27,500 includes the income tax and other taxes that need to be paid by the businesses offering these services, so take another 5% of that amount, leaving you with only 47.5% of your original $55,000 that is truly “after-tax” income.
My tax charts http://www.irs.gov/pub/irs-pdf/i1040tt.pdf show tax on $47,200 as $8,616.
You’re right, I screwed up by deducting FICA before the fed income tax. And yes, state tax is fed-deductible.
The first was a straight error, while the second was a deliberate simplification, trying to get a good ballpark in only 6 easy-to-compute steps.
I realized the FICA goof after I posted, but there’s no delete button. Oh well, if you say enough stuff in print, some of it is bound to be wrong.