I assume this has been fully covered somewhere on this site, but I have been unable to find anything that covers the details I am wondering about. I'm starting this upcoming summer at a BB investment bank that has raised starting salary to $85K. What is a general estimate that I can use as a placeholder when thinking about my all-in compensation, $40K? 50K?
And then is this taxed at 25% (which a quick Google search seems to say it is), or is it simply added to the $85K so that I am in a higher tax bracket and this is effectively taxed much higher than 25%? (I assume my signing bonus is treated the same way as this year-end bonus).
Thanks for any and all clarification, guys.
If you know of any comprehensive posts that cover this, would be greatly appreciated, as would anywhere that "shows the math"...
If you are working in New York City, your all in tax rate assuming you are single and making about 120k/year all in will be about 45%. Your bonus should be around 40k assuming your bank isn't failing and you make middle/top bucket.
28% Federal 6.5% NY state 3.6% NY city 6.2% Social Security 1.45% Medicare
It's bad, but not quite that bad. You're forgetting that the 28% is the marginal tax rate, and only applies to your bonus basically (28% applies for income > $87K)
Paycheckcity is a good site to get an idea of what you will be getting every pay period. If you run $140K paid annually through it, you get:
Annual Gross Pay: $140,000.00 Federal Withholding: $30,639.75 Social Security: $7,254.00 Medicare: $2,030.00 New York: $8,760.72 SDI: $31.20 City Tax: $5,061.00
Net Pay: $86,223.33 Net Tax Rate: 38.4%
The good news is that your net tax rate will not go up much in the future and may go down (assuming you earn big bucks). Social Security phases out over $117K and in the future you may own a home (interest, property tax deductions) and live outside the city.
Plus you can save by using tax-deferred retirement savings vehicles (401-k) and then wait to pay taxes on the withdrawal until you have established residency in FL/AZ/some other low tax state where old people go to retire.
What is the general rule on how much of your salary a BB will match for a 401(K) or whatever retirement account? And do they match it 1:1?
Not exactly sure as I am still in college, but from what I see on Glassdoor, standard is 1:1 up to 3-4% of salary. Really no verification there so take that with a large grain of salt.
It's pretty sickening how much we pay in taxes, isn't it?
Yes, but better than the alternative: not having to pay taxes and making no money. Also, while NYC rent/taxes are ridiculous at least you don't need to own a car which probably costs about 5-6k/year between the gas, insurance, depreciation, and parking (Assuming you are driving a very modest car).
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