IB AN2 here in NYC. Not sure I'm doing my taxes right, but anyone else getting a lower federal refund? Last time I got ~$4k in 2024. Now with the bonus and everything, i'm getting a measly ~$200-500 bucks?!?!
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Based on the most helpful WSO content, it seems your situation could be influenced by several factors:
Higher Income Bracket: As an IB Analyst 2 in NYC, your bonus and overall compensation likely pushed you into a higher federal tax bracket. This would result in more taxes being withheld throughout the year, leaving less room for a significant refund.
Bonus Taxation: Bonuses are typically taxed at a higher supplemental rate (22% federally, plus state and city taxes in NYC). This could significantly impact your overall tax liability and reduce your refund.
State and City Taxes: NYC has some of the highest combined state and city tax rates in the U.S., which can eat into your take-home pay and affect your refund expectations.
Changes in Deductions or Credits: If your deductions (e.g., SALT cap, 401k contributions) or credits have changed compared to 2024, this could also explain the reduced refund.
Withholding Adjustments: If you didn’t adjust your W-4 withholding after receiving a raise or bonus, your employer might have withheld less than necessary, leaving you with a smaller refund or even a potential tax bill.
To address this: - Review Your Tax Withholding: Use the IRS Tax Withholding Estimator to ensure your W-4 is set up correctly for your income level. - Check Deductions and Credits: Ensure you're maximizing deductions like 401k contributions, student loan interest, or other applicable credits. - Consult a Tax Professional: Given the complexity of NYC taxes and your income structure, a tax advisor can help optimize your filings and ensure accuracy.
If you’re still unsure, consider revisiting your tax strategy for 2026 to avoid surprises.
Sources: Bonus Tax Too Damn High, Effective Tax Rate in NYC, Retirement Planning for IB Analysts, The TAX CUT - How you plan to spent it
bump
Tax advice on wso now, nice
silence intern
Wait so if my income increased… and withholding stayed the same w/ increasing marginal rate… I pay incrementally more in taxes, thereby negating my refund? This is shocking news!
This is actually an important lesson for bankers and gets worse as you make more. Federal taxes on bonuses are generally withheld by your company at ~21% level which is generally way under what you actually owe. I'll use a rough associate comp as an example
Salary = $200K
Bonus = $250K
There are deductions, withholding, etc. that complicates this but your bonus probably had $250K*21% = $53K in federal taxes. Once you make past ~$200K (I'm assuming for simplicity this is your salary portion you've already made) you're into the 32% bracket so most of your bonus is way under withheld, ~$25K+ under in the example above approximately. You're ok this year OP since you're still in lower income brackets but many associates find themselves owing 10's of thousands without realizing once they get their first real bonus and then go to file taxes the next period.
You’ve come to the right place to asses your tax sitch !!
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