Bonus just hit my account. 50k gross and is just a hair over 25k after tax. Such a depressing sight.
Is 50K gross for first years in line with the rest of the street? This came unexpectedly earlier than I had anticipated, was only communicated to me late last week
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That's just witholding
How much could he get back only on bonus, let's assume NYC, single, 100k base? Really trying to figure out how bonus taxes work.
The first thing to realise is that there no such thing as bonus taxes, all income (from an employer) is taxed the same.
Apart from that, it depends, there are tax calculators online.
Welcome to the real world....nothing more depressing than buying the government a car in cash with your bonus and then going to get a loan to buy one for yourself.
Touché. Plenty of low tax financial hubs though…
Furthering this question, how does taxes on bonuses work? I know a much higher amount is withheld, but when you get a tax refund do you get a good majority of it back? So in this scenario, OP got 25k after tax, but would he/she get ~5k back in refunds or am I just being too optimistic :( ?
Bonus is withheld too high, but if you think about it your base salary is being withheld too low. You should get a refund but it will also be lower than you expect.
Mhm I see, that makes sense. Just a follow up ig, so at the end of the day, would the effective tax rate on the bonus = the tax rate on base? For the purpose of this conversation, lets assume 100k in NYC and 50k bonus. 100k salary is net $69,696 so effective tax rate of 30.30%. Would the bonus also be taxed at 30.30% ($34,850 net bonus) or would it be higher?
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Just a small note about the "high property taxes" that everyone shits on texas for, 7% property tax of a house worth $100 = $7, and 3.5% property tax of a house worth $200 is also $7. My point is that TX houses historically have been so cheap that high property tax rates haven't mattered that much in comparison to other states. Although home prices are rising in TX, so slowly this math will make texas property taxes worse, but historically the high property taxes haven't mattered much.
FWIW, Texas has a state law called the “Homestead Exemption” which dictates that property taxes on an owner-occupied primary residence can’t increase by more a certain % YOY while you live. I believe the annual increase cap is 10% but double check before you quote me.
Spot on - people forget how crippled the infrastructure and how low tax states are in the eyes of urban planners etc. People want all the benefits of public transportation, green spaces, walkability, strong power grid, clean water, great education, investment in science and the arts, investment in local communities - without any of the costs. Baffling how still people complain about taxes in America of all places
irregardless of how I feel about the stereotypical twitter liberal uRbAnIsM policy slate described above, my NYC tax money largely does not support any of these things. it mostly just covers block bookings at hotels for migrants, the lifestyles of all the people I see on the street smoking weed at 3 pm on a weekday when I go for a walk, and the second homes of MTA and teacher’s union officials
Or you can live in MA or have better education systems, cleanliness, upkeep for a 5% tax for the first 1M earned. Yes tax-free states like TX/FL do have some true infrastructure issues but I don't understand why NY feels the need to tax so much more than MA when outcomes seem worse. Anecdotally property taxes in MA suburbs are much lower as well than in NY suburbs.
Boston doesn't have an additional city tax and just feels much better kept. Public schools seem slightly better (BLS definitely seems better funded than Stuyvesant).
Sure I think we have the same conclusion just different ways to get there. The marginal 5% is just the cherry on top: eg we agree people complaining about high taxes are clowns.
However id push back a little bit given how expensive it is to maintain all the public transport that NY has + need for increased security (expensive NYPD costs) for things like UN security/ embassies and whatnot.
Public transport and "world class resources" in NY? Bizarre comment. You must have never left the US...
This is also true, US taxes are low compared to ROW taxes. It would make sense that the ROW has better public utilities. But I agree when you compare even the most developed cities in the US they dont compare to say the EU or East Asia.
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Dallas has awesome roads, best highways of any major city in the country IMO and I’ve driven in basically every major city. A lot of the issues in Houston have more to do with the land and location, zoning laws, and build out. I’m not entirely rejecting your analysis, but for example Illinois has income taxes and high property taxes and yet Chicago’s infrastructure and schools are a disaster and people with money keeping fleeing. Sometimes government takes the money and wastes it on corrupt crony projects and kickbacks and such. It varies a lot by locality.
Having "nice" roads is the least important thing when urban planning. The rest of the world laughs at us when it sees our highways especially the infamous junction in Houston thats literally the size of Venice. The goal is to have pristine public transportation to and cities that make driving impossible to incentivize walkability. Why would you want a 5000000 lane highway with a Bucees Bojangles and a Dollar General on every side?
I forgot that taxes get rid of hot weather. I also forgot that New York doesn’t get extremely hot in the summer and smell like shit because their world class services can’t even manage the trash services to be picked up on time. Also, New York totally doesn’t have dead cold winters. Also, New York doesn’t cost a million dollars on everything else
take a walk through Manhattan and tell me with a straight face that you’re getting your money’s worth from taxes lmfao. you pay taxes in this city to a) subsidize the lifestyles of bums and druggies, b) to enrich officials who are nominally supposed to be providing those “world-class” resources but instead have a vested interest in not solving the problems they’re supposed to solve, and c) keep public infrastructure at a barely functional level (only once a and b are covered though)
“world-class resources” come on man
Your bonus gets withheld as if you make that money every single paycheck. So hypothetically let’s say the paycheck that includes your bonus is $55k ($50k bonus + $5k salary). It gets withheld as if you make $55k * 24 = $1.32 million, so very aggressively at the highest tax rate.
Then during tax season in January through April 2025, the IRS looks at your actually 2024 taxable income and calculates your actual owed taxes for 2024 based off the $160k you actually made.
If 2024 Actual Owed Taxes 2024 Withholdings, then you get 2024 Withholdings - 2024 Actual Owed Taxes = 2024 Tax Refund deposited into your bank account. This has been the case every year for me, and I’ve had the IRS pay me up to $15k. It’s a good feeling, even though technically the IRS screwed me over by taking a $15k interest-free loan from me that year.
You can use the website below to get a estimate of what your actual 2024 YTD owed taxes will be, and can compare against your YTD total taxes paid in your paystub, to get an estimate of your tax refund. Obviously this method will be most accurate using your 12/31/24 paystub. It even allows you to plug in 401k contributions so they can factor in those tax savings.
https://smartasset.com/taxes/income-taxes#IM99f3eELd
IB analyst learns about taxes
50k gross is higher than what quite a lot of ASOs got at BoA earlier this year!
If you went to public school and/or got Pell grant - well you gotta pay back. If your parents paid for it - why are you complaining anyways. It’s all gravy
I can’t believe people making well into 6 figures do not understand withholding.
“Six figures” is some 90’s propaganda and literally means nothing. I remember seeing my first bonus get cut in half… it is fucking jarring.
"Making six figures" was actually most common and originated in the 80s.
It is so funny that it is still used today. Look, its still an accomplishment, but in no way shape or form equates to hitting six figures the way it did in the 80s, when the average salary was ~$23,600 (1985). Today, the equivalent of hitting 6 figures would roughly be $240k (back of the envelope math, 4x average salary of say ~60k).
You missed my point entirely.
My point is, you're well paid for your age.
You should be able to figure out what withholding is and how it works, it's not rocket science.
Is 50k for a first year bonus in-line with what can be expected across top-mid bucket this year? Seems reasonable giving the serious pick-up in deal activity but feel like it’s different at every shop
1913 was a mistake
regrets, I see
doesn’t sound like a mistake on their end though
Definitely worked in the favor of the bureaucracy, but a shame modern Americans are subject to the cowardice of our ancestors.
Seems early for bonus? Was this a BB? or MM shop? Usually bonuses go out in August but maybe the game has changed
Smart enough to get into banking, yet doesn’t understand how taxes work, sounds about right for this forum.
Supplemental income (bonuses) have a tax withholding rate federally of 22% and a state rate for NY of 11.7%. Then add in FICA, Medicare, and NY family leave insurance. You will get close to a 50% tax rate on your bonus.
Hey OP: Sorry to hear. I am sure you worked hard and had in the back of your mind the large 75k+ bonus to help you cope with the long nights. It sounds shitty, but just count your blessings. You are gaining IB experience in the toughest market in over 2 decades (worse than 2008). There are countless laid-off, experienced bankers out there (including myself) that are recruiting down a year or two and still spending 6-9+ months getting back in. As an MD mentor of mine told me when I started IB for ~60% of street, "you could be paid $0 for your first two years and still become filthy" because of the resume and skill building. Additionally, from experience, times in need of high perseverance make you a much more empathetic person, which is an extremely valuable/successful trait in leaders and is something that is generally quite low in high finance. Keep your chin up and keep grinding. Every day should move your skills needle just a hair further. Cheers!
Do not get chopped into two pieces OUCH OUCH
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