How Much of My Salary Goes to Taxes?
As tax season rolls around, you may be asking, "how much of my salary goes to taxes?" Whether you've started a new job or made a major purchase like a home or car, you may be curious about what your take-home pay actually adds up to. The good news is that figuring out the percentage of your salary that makes it to your bank account can be pretty easy with a few simple calculators.
Your Federal Tax Bracket
The first step is to determine your federal tax bracket.
Your federal tax bracket is the highest rate at which the government will tax your income for a given year. With the U.S. system of progressive tax, you won't find a single rate applied to your entire income. Instead, different portions of your income are taxed at different rates. These rates are then blended by the calculator to help you determine your overall tax bracket. Once you've calculated your tax bracket and see how much of your salary is going to taxes, you can adjust your W-4 form with your employer to ensure the right amount is being withheld from your check each pay period.
You probably only want to file a new W-4 if your filing status changes (marriage, divorce, or a change to head of household status) or if you're uncomfortable with the amount of tax you owe when you file your annual returns.
Your State and Local Tax Obligations
The next step toward determining, "how much of my salary goes to taxes" is to factor in your state and local tax obligations. While not every state requires an income tax, you can quickly check up on what to expect with a state tax reference guide. It breaks down tax brackets by state and can help you estimate a rough amount of your salary that will go toward your state obligations. You can also sit down with your HR department to help determine your local tax obligations.
Figuring out how much of your salary goes to taxes can help you proactively budget your take-home pay, and help you adjust the amounts you're having withheld by your employer to meet your tax obligations throughout the year. Not only will you have a better idea of what percentage of your pay goes toward taxes, but you'll also be empowered to make adjustments to your withholdings using a W-4 form to ensure that you have fewer surprises each year when you file your taxes.