Author Topic: What is your TOTAL tax burden?  (Read 3508 times)

DadJokes

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What is your TOTAL tax burden?
« on: March 08, 2019, 08:38:26 AM »
Since federal income tax is just a small portion of the overall taxes we pay, I thought I would look into all state, local, and federal taxes. I will be using 2019 estimates in this calculation.

1) Federal Income Tax - After adjustments, standard deduction, and credits our total tax bill for 2019 will be approximately 1.36% of income, $1,231.

2) Social Security & Medicare - 7.65% of eligible income comes out to 7.15% of total income, $6,452.

3) Property tax - Combined tax rate for my town & county is $3.5164 for every $100 of assessed value. An appraisal of $256k gives an assessment of $64,100, resulting in tax of $2,254.

4) Sales tax - This is the hardest to calculate, but it looks like we will spend around $16,600 on items subject to sales tax in 2019. With a local sales tax of 9.25%, $1,405 of that total will be sales tax.

5) Vehicle Registration - Two vehicles come out to around $192.

6) Gas tax - TN gas tax is $0.214 per gallon. I am estimating that we will use 1,545 gallons of gas at an average price of $2.20/gallon, giving around 702 gallons of fuel and $150 in taxes.

All told, we will pay approximately $11,684 in taxes, which comes out to around 12.9% of all income (taxable and otherwise).

How does that compare to your total tax burden?

v8rx7guy

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Re: What is your TOTAL tax burden?
« Reply #1 on: March 08, 2019, 09:00:24 AM »
1) Federal Income Tax - $1,849

2) Social Security & Medicare - $5,251

3) Property tax - $2,694

4) Sales tax - No Idea.  If we spent $15,000 on taxable items, that would be $1,305, we will go with that.

5) Vehicle Registration - $230 (two vehicles, pop-up travel trailer, tow dolly)

6) Gas tax - WA gas tax is $0.494 per gallon, we used about 1,000 gallons last year based on $250/mo from our budget and estimating $3.00/gal.  So $491.

Grand Total: $11,820 which comes out to approximately 16.5%
« Last Edit: March 08, 2019, 02:11:23 PM by v8rx7guy »

NotJen

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Re: What is your TOTAL tax burden?
« Reply #2 on: March 08, 2019, 09:41:13 AM »
Total estimated tax burden for my 2018 actuals: $29,770

1) Federal Income Tax = $14,561 (11.7%)

2) FICA = $8,865 (7.1%)

3) Property Tax = $910 (0.7%)

4) Sales Tax - Estimate, based on 9% of $17.4k spending that was mostly all taxable stuff = $1,566 (1.3%)

5) Vehicle Registration - Ad valorem tax + tag fee = $106 (0.1%)

6) Gas Tax - Estimate, Wikipedia says 20.4 cents of state tax, and 18.4 cents of federal tax, on ~400 gal = $157 (0.1%)

7) State Income Tax - we have state income tax here = $3,605 (2.9%)

% of all sources of income = 23.9%. 


I'm used to looking at the large percentage of fed+fica+state income tax, but interesting to know that the other taxes are only 2.2% of income.  They are 9.6% of my 2018 spending, though.
« Last Edit: March 08, 2019, 09:46:56 AM by NotJen »

Bloop Bloop

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Re: What is your TOTAL tax burden?
« Reply #3 on: March 09, 2019, 01:37:05 AM »
I'm Australian by the way.

1) Income tax approx $45,000

2) Medicare levy $3,000

3) Sales tax (GST) on business takings $22,500

4) Sales tax on private consumption (GST) $3,000

5) Land tax $3,000 (investment property)

6) Rates $1,250 (family home)

7) Vehicle registration $900

8) Fuel excise $250

Grand Total: approx $79,000 in tax paid

In other words for every $1 earn, I pay about 35 cents in tax, 20 cents in business expenses, and I take home 45 cents in my pocket

So you can kinda see why living in Australia is very expensive



Much Fishing to Do

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Re: What is your TOTAL tax burden?
« Reply #4 on: March 28, 2019, 02:52:56 PM »
Crazy outlier year, few extremely profitable business projects, so this is interesting to me because numbers all many times higher than i am used to.  In my job I generally made around 130k.  Then started business and made less (like $80k), then more (got it back to six figures for a few years), then much more the last couple years (300k, 400k) and then this year ($1.5M).  The amount of hours/work/pressure/liability did also increase many times as well, so at end of year wound down business and am consulting now.  I'm not promising the below is right as bouncing between business return and personal

Total Income:  $1,550,000
Federal: 472k
State & Local: 51k
FICA: 20k
Property: 4k
Sales Tax: 3k?

Total: 550k of $1,550,000 (35%)

So Basically made 15x annual spending, spent 1x (we admittedly splurged as I was drowning in work), paid taxes of 5x and so saved 9x.  Pretty instant & unexpected fatFIRE.

« Last Edit: March 28, 2019, 02:54:30 PM by Much Fishing to Do »

TexasRunner

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Re: What is your TOTAL tax burden?
« Reply #5 on: March 28, 2019, 02:57:56 PM »
Posting to follow:

I don't actually know just yet but fr calendar year 2019 I am splitting out ALL sales tax and other local taxes in mint.  I should be able to state exactly what I paid in taxes to local, state and federal, by the end of the year without having to guess at Sales Tax.  It will be an interesting experiment.

Also good to note:  Federal gas tax is 18.4 cents per gallon, State (Texas) is 20 cents per gallon.  Since the prices fluctuate constantly, you actually cant get fuel taxes paid without breaking out every single transaction...  Which I am.  So there's that.

See you guys in January.

secondcor521

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Re: What is your TOTAL tax burden?
« Reply #6 on: March 28, 2019, 06:33:40 PM »
6) Gas tax - TN gas tax is $0.214 per gallon. I am estimating that we will use 1,545 gallons of gas at an average price of $2.20/gallon, giving around 702 gallons of fuel and $150 in taxes.

I'm not sure, but I think there is a federal gas tax as well.

Also, in your first paragraph you allude to state income taxes but you labeled item 1 as federal income taxes.

I really can't play this game.  As a retired person with various small income streams and side gigs plus draws on retirement I don't really have a solid definition of income.  Also, I pay ridiculously low taxes because I look like a low-income unemployed person.

DadJokes

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Re: What is your TOTAL tax burden?
« Reply #7 on: March 29, 2019, 07:11:17 AM »
6) Gas tax - TN gas tax is $0.214 per gallon. I am estimating that we will use 1,545 gallons of gas at an average price of $2.20/gallon, giving around 702 gallons of fuel and $150 in taxes.

I'm not sure, but I think there is a federal gas tax as well.

Also, in your first paragraph you allude to state income taxes but you labeled item 1 as federal income taxes.

I really can't play this game.  As a retired person with various small income streams and side gigs plus draws on retirement I don't really have a solid definition of income.  Also, I pay ridiculously low taxes because I look like a low-income unemployed person.

You're right - I was pretty lazy in calculating that. I even used the old tax, rather than the new one passed in 2018. I also worded that line completely wrong, though ~700 gallons is still close to what we expect to drive, so that should be 0.26 state tax per gallon & 0.184 federal tax per gallon, totaling ~$312. Thanks for pointing that out for me!

I just wanted to break out all taxes, including federal. My state doesn't tax income.
« Last Edit: March 29, 2019, 08:45:25 AM by DadJokes »

bacchi

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Re: What is your TOTAL tax burden?
« Reply #8 on: March 29, 2019, 01:05:22 PM »
Good exercise.

1) Federal 4.35%
2) SS 7.65%
3) Property 2.19%
4) Sales 1.1%
5) Vehicle .09%
6) Gas .06%

= 15.44% of income went to taxes

Not too bad.


JSMustachian

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Re: What is your TOTAL tax burden?
« Reply #9 on: April 24, 2019, 03:36:34 PM »
My calculations from Texas:

Federal- $502.63
SSN and Medicare- $5773.10
Property Tax- $3420
Sales tax- $148.24
Vehicle Registration- $148 (2 vehicles)
Gas Tax- $99.84

$10091.81 in total tax which is 6.94% of our income.
« Last Edit: April 24, 2019, 03:40:20 PM by JSMustachian »

Bloop Bloop

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Re: What is your TOTAL tax burden?
« Reply #10 on: April 25, 2019, 05:07:06 PM »
My calculations from Texas:

Federal- $502.63
SSN and Medicare- $5773.10
Property Tax- $3420
Sales tax- $148.24
Vehicle Registration- $148 (2 vehicles)
Gas Tax- $99.84

$10091.81 in total tax which is 6.94% of our income.

How do you have so much untaxed income?

Crazy how much taxes differ in this thread. I feel like literally the large majority of every dollar I earn goes to tax.

The_Dude

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Re: What is your TOTAL tax burden?
« Reply #11 on: April 25, 2019, 05:35:26 PM »
I paid 30% of my gross income in all the major forms of taxes (fed, state fica, medicare, sales tax etc.).   

I paid about twice as much in taxes as I did for all other expenses.

JSMustachian

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Re: What is your TOTAL tax burden?
« Reply #12 on: April 26, 2019, 12:30:21 PM »
My calculations from Texas:

Federal- $502.63
SSN and Medicare- $5773.10
Property Tax- $3420
Sales tax- $148.24
Vehicle Registration- $148 (2 vehicles)
Gas Tax- $99.84

$10091.81 in total tax which is 6.94% of our income.

How do you have so much untaxed income?

Crazy how much taxes differ in this thread. I feel like literally the large majority of every dollar I earn goes to tax.

Hello Bloop Bloop,

I suspect it's my wife's job as a teacher. She has access to a pension and a 403B/457B so that hides a lot of money from income taxes. Plus the child tax deduction helps too.

Laserjet3051

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Re: What is your TOTAL tax burden?
« Reply #13 on: April 26, 2019, 02:44:35 PM »
Is everyone posting here using the same definition for the denominator? For example, OP is defining the denominator as total income.  If your strictly a wage slave, then perhaps thats simple, every $ you earned prior to any payroll deduction, correct?

If your a business owner who does or does not, also work as a W2, do you include total gross business income in the denominator? Prior to removing any and all business expenses? If we all agree this is the standard definition for this thread, is that a fair representation of tax liability? Since only business profits are taxed, shouldnt we strip out biz expenses to perform this calculation? And if we do that, wont the %s posted above (for business owners) rise substantially, making the estimated %s above artificially deflated?

The same argument could be made for W2 folks; that the % tax liability should be a function of AGI, after deductions, as it portrays a more accurate reflection of tax load. What do you think?

DadJokes

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Re: What is your TOTAL tax burden?
« Reply #14 on: April 26, 2019, 04:02:00 PM »
I would think that income before taxes is the appropriate way to include business income in this, since that is what you are taxed on.

Along with our W2 income, I also included bank interest and VA disability.

The_Dude

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Re: What is your TOTAL tax burden?
« Reply #15 on: April 30, 2019, 07:00:38 PM »
I used total income, rather than AGI.  As the after tax stash grows it adds a nice little chunk to my gross income.  Thankfully almost all qualified dividends.

As a business owner I'd use the net profit from the business that flows to you as your income and that is subject to taxes, not the income at the business level.  That wouldn't make any sense. 

I also, don't think W2 folks should use AGI.

STEMorbust

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Re: What is your TOTAL tax burden?
« Reply #16 on: April 30, 2019, 10:42:57 PM »
I'm in Oregon and have paid 31% of my YTD earnings to income tax (about $15k). Feeling like I could be doing a lot better after seeing the other replies.


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cashstore

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Re: What is your TOTAL tax burden?
« Reply #17 on: May 26, 2019, 06:24:40 AM »
0.85% of 'salary' get's taxed federally.  Officially we are in the 22% tax bracket.
We pay about 2% of 'salary' to the state.  Officially it is 4.25% less some adjustments.
Starting this year the City is taking a full 1%.  I called and they said it's coming off of AGI.  As such, I'd expect it to be effectively less than 0.50%.
Property taxes: About $5k on a $200k house, give or take.  This is by far the largest in absolute or percentage terms.
My FICA is the same as everyone else.
I probably drive less, so less gas tax.
All in all I probably lose about 5%-6% effective to taxes, overall, plus FICA.
Planning to move to Florida in 4 years when I fully FIRE to avoid the 1% city and 4.25% state, and that property tax.  The way I see it with 2 kids I'm getting about $60k federally tax free, and around $80k if we have kid 3 like we plan.


APowers

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Re: What is your TOTAL tax burden?
« Reply #18 on: May 26, 2019, 07:20:35 AM »
Earned income: ~$40k

Taxes: ~0


Federal/state income tax (including medicare/ss): -2700
Property tax: ~1300
sales tax: ~800?
gas tax: ~200
vehicle registration: ~200

As a percentage of income: 0%.  I'm actually surprised at how HIGH all y'all percentages are; you must be in a much higher income bracket than me.

Robert R

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Re: What is your TOTAL tax burden?
« Reply #19 on: July 31, 2019, 06:19:43 AM »
Hi !

Just wanted to give you some insight to taxes in Sweden.

My income including taxes paid directly by the employer: 629391SEK (62939$) (1$=10sek)

Taxes:

AGA (paid directly by the employer) : 150475kr = 24%

Municipality tax= 148822kr = 23,6%

Federal tax = 4723kr = 0,75 % (Im barely above the federal tax bracket) (Federal taxes are calculated in the following way, ((Total income - AGA - 455300kr)*0,2 = Federal tax) it is increased to 25% for any income above (Total income - AGA - 662300kr)

VAT = I estimate 15000kr could be alittle more or less (25% on most Products, but no VAT on rent)
Tax on electricity = 3000kr = 0,48% ( Around 45% of the electricity bill is taxes, I live in a small apartment so not very much for me, but if you live in a house this can be quite alot of money)
Tax for free lunch at work= 7176kr

Total taxes  = 329196kr 52,3%

There is also capital taxes that I haven't included, but they are a flat 30% on any dividend or profit you make when Selling a stock or fund.

I dont have a car or house which keeps down my taxes somewhat, also not having to pay federal taxes helps alot to keep down my tax %
Around 61% of the price of gasoline in Sweden are taxes so around 38kr/gallon or 10kr/liter in tax. That + Taxes for the car itself makes cars very expensive in Sweden.

I apologize for any typos, if there is anything that is unclear, just ask and I will try to fix it.

SimpleLifer

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Re: What is your TOTAL tax burden?
« Reply #20 on: August 06, 2019, 10:11:44 PM »
My 2018 taxes from California:   
   
77,680   fed tax
32,892   state tax
11,317   ssn & medicare
21,000   prop tax
  3,750   sales tax
=====
146,639   total taxes paid
44.58%   percentage of total income

BTDretire

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Re: What is your TOTAL tax burden?
« Reply #21 on: August 08, 2019, 02:18:26 PM »
       
Property tax  $    1,030
SS   Tax        $ 10,394
Sales Tax       $   2,100           Estimate, I expect it is closer to $1,200 but, gas tax, cable fees
Auto tag fees  $     277
State Tax        $        0
Federal tax      $ 2,541 added after notice I missed it.
 Total             $  16,345


Income $112,600     Includes taxable interest and ordinary dividends
  That is 14.5% total tax burden.
 We were self employed so paid both halves of SS, otherwise 7.6%

 Edited to add Federal tax.


« Last Edit: August 13, 2019, 03:48:54 PM by BTDretire »

Laserjet3051

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Re: What is your TOTAL tax burden?
« Reply #22 on: August 08, 2019, 05:52:50 PM »
       
Property tax  $    1,030
SS   Tax        $ 10,394
Sales Tax       $   2,100           Estimate, I expect it is closer to $1,200 but, gas tax, cable fees
Auto tag fees  $     277
State Tax        $        0
 Total             $  13,801

Income $112,600     Includes taxable interest and ordinary dividends
  That is 12.2% total tax burden.
 We were self employed so paid both halves of SS, otherwise 7.6%

0 federal income tax?

bmjohnson35

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Re: What is your TOTAL tax burden?
« Reply #23 on: August 10, 2019, 09:38:19 AM »

Generally speaking, I prefer to reference total tax burden of total NW.

Adding the OP's 6 categories together, it is interesting to compare our last year employed, against next year being employed for 2 months, vs. post employment in 2021. Keep in mind, I intend to stay at or below $32k in AGI starting in 2020 to maximize ACA subsidies:

2019 Projected total tax burden (percentage of income): 18%
2019 Projected total tax burden (percentage of NW): a little under 2%

2020 Projected total tax burden (percentage of income): 10%
2020 Projected total tax burden (percentage of NW): 1/3 of 1%

2021 Projected total tax burden (percentage of income): 5.6%
2021 Projected total tax burden (percentage of NW): 1/6 of 1%

I am over 12 years away from SS eligibility.  I intend to try to stay under $32k in AGI up until that time. I don't intend to touch my retirement account until 60 at the earliest.  Once I start collecting SS, I won't be able to stay at or under $32k income target.  Between my spouses SS, my pension, my SS and any IRA withdrawals, our income tax burden will see an increase.

BJ

Christof

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Re: What is your TOTAL tax burd
« Reply #24 on: August 10, 2019, 09:55:26 AM »
Crazy outlier year, few extremely profitable business projects, so this is interesting to me because numbers all many times higher than i am used to.  In my job I generally made around 130k.  Then started business and made less (like $80k), then more (got it back to six figures for a few years), then much more the last couple years (300k, 400k) and then this year ($1.5M).  The amount of hours/work/pressure/liability did also increase many times as well, so at end of year wound down business and am consulting now.  I'm not promising the below is right as bouncing between business return and personal

Total Income:  $1,550,000
Federal: 472k
State & Local: 51k
FICA: 20k
Property: 4k
Sales Tax: 3k?

Total: 550k of $1,550,000 (35%)

So Basically made 15x annual spending, spent 1x (we admittedly splurged as I was drowning in work), paid taxes of 5x and so saved 9x.  Pretty instant & unexpected fatFIRE.

Please excuse me my curiosity, but what job or business makes more than $6,000 a day? I understand you worked a lot, but even working every single hour (24/365) that is still over $175 per hour of your life.

BTDretire

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Re: What is your TOTAL tax burden?
« Reply #25 on: August 13, 2019, 03:47:13 PM »
       
Property tax  $    1,030
SS   Tax        $ 10,394
Sales Tax       $   2,100           Estimate, I expect it is closer to $1,200 but, gas tax, cable fees
Auto tag fees  $     277
State Tax        $        0
Federal tax *     $ 2,541 added after notice I missed it.
 Total             $  16,342
0 federal income tax?

 No, No, I paid the IRS! :-)
 How did I miss that?
 I corrected it in both posts.
14.5% tax burden
               Thanks

Actual tax calculated $5,041 however, we had tuition tax credits of $2,500 reducing the fed tax paid.
« Last Edit: August 13, 2019, 03:51:17 PM by BTDretire »

Much Fishing to Do

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Re: What is your TOTAL tax burd
« Reply #26 on: August 14, 2019, 02:14:11 PM »
Crazy outlier year, few extremely profitable business projects, so this is interesting to me because numbers all many times higher than i am used to.  In my job I generally made around 130k.  Then started business and made less (like $80k), then more (got it back to six figures for a few years), then much more the last couple years (300k, 400k) and then this year ($1.5M).  The amount of hours/work/pressure/liability did also increase many times as well, so at end of year wound down business and am consulting now.  I'm not promising the below is right as bouncing between business return and personal

Total Income:  $1,550,000
Federal: 472k
State & Local: 51k
FICA: 20k
Property: 4k
Sales Tax: 3k?

Total: 550k of $1,550,000 (35%)

So Basically made 15x annual spending, spent 1x (we admittedly splurged as I was drowning in work), paid taxes of 5x and so saved 9x.  Pretty instant & unexpected fatFIRE.

Please excuse me my curiosity, but what job or business makes more than $6,000 a day? I understand you worked a lot, but even working every single hour (24/365) that is still over $175 per hour of your life.

Really doesn't matter what the business does.  That is the crazy thing about owning a business that doesn't bill out on a per hour basis, there are thousands of factors that lead to what you profit (for me it was mostly being able to provide a product with a process that was so much more efficient than the competition that I was able to pay my employees more (per hour) than they were making elsewhere, the clients were paying less than they were paying elsewhere, and there still could be a lot left over for me (or not!, depending on the month)). 

I fortunately never had a negative year but there definitely were months when I was effectively being "paid" Negative $100/hr....Trust me, I neither feel like I'm "worth" $1M year nor negative $1M year, yet those were both possibilities.

Its really the risk in the end that I was getting paid for on top of the new ideas re: efficient process, I had a couple partners when I started but they left due to us not making much money, and probably really more the potential losses involved (actually one just transitioned to being an employee at a set salary from me).  This eventual huge year got me quickly to FIRE, so I sold the business (or really just gave it away).. (who wants to then lose it all when you've hit your number, which could definitely happen no matter how hard I work if the tide turned).


« Last Edit: August 14, 2019, 02:18:03 PM by Much Fishing to Do »

Christof

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Re: What is your TOTAL tax burden?
« Reply #27 on: August 17, 2019, 10:15:41 AM »
Well, Ive been a business owner for almost 25 years, so Im definitely aware of the ups and downs and risks. But 1.5M, that is 8-17M in salaries or like 150-300 employees, so not a small company, at least for the average successful business, ignoring the majority of unsuccessful businesses that file for bankruptcy or are closed within the first five years.