### Author Topic: 25X Rule  (Read 2570 times)

#### MakeitRain

• 5 O'Clock Shadow
• Posts: 6
##### 25X Rule
« on: July 27, 2016, 10:30:19 AM »

When determining your 25x number, how do you factor in taxes that you will have to pay when liquidating those funds?  Do you pad that 25x number by 15% (or what ever tax bracket) to determine your true 25x number?

Thanks,

#### MDM

• Senior Mustachian
• Posts: 10717
##### Re: 25X Rule
« Reply #1 on: July 27, 2016, 10:31:45 AM »
Yes, "x" includes all expenses, including taxes.

#### thd7t

• Handlebar Stache
• Posts: 1348
##### Re: 25X Rule
« Reply #2 on: July 27, 2016, 10:39:57 AM »
You should calculate your actual tax burden. If you are in the 15% bracket your rate will never be over 13.75%, but is likely to be lower, after deductions. There are excellent articles on the low taxes associated with ER.

#### Classical_Liberal

• Handlebar Stache
• Posts: 1171
• Age: 45
##### Re: 25X Rule
« Reply #3 on: July 27, 2016, 01:27:27 PM »

#### 2Birds1Stone

• Walrus Stache
• Posts: 6524
• Age: 1
• Location: Earth
• K Thnx Bye
##### Re: 25X Rule
« Reply #4 on: July 27, 2016, 01:54:19 PM »

#### arebelspy

• Senior Mustachian
• Posts: 28457
• Age: -999
• Location: Seattle, WA
##### Re: 25X Rule
« Reply #5 on: July 28, 2016, 12:53:20 AM »
When determining your 25x number, how do you factor in taxes that you will have to pay when liquidating those funds?  Do you pad that 25x number by 15% (or what ever tax bracket) to determine your true 25x number?

You don't "add" to the 25x rule, necessarily.. but you save 25x your expenses.  It just happens that taxes are an expense.  They're one you can minimize (the GCC link above is a good one), but they're part of your expenses, and should definitely be counted before you calculate that 25x number.  :)
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