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Author Topic: Fist Year Associates: Expected Total Tax Payout (by Market)  (Read 3135 times)

GreedyJD

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Fist Year Associates: Expected Total Tax Payout (by Market)
« on: October 12, 2008, 05:25:54 PM »
I'm a first year associate with a large firm in New York City am receiving a $160k/yr base salary. Given the high state and city taxes associated with living in New York City, a first year associate can generally expect to pay ~39-41% of his/her income out in the form of taxes depending upon the number of deductions claimed. I have heard that first year associates in CA on the $160k/yr base can expect to pay slightly more out in the form of taxes (40-42%) though am not sure.

I'm curious to hear what fellow first year associates in other markets (that are currently paying $160k/yr) can expect to pay in the form of taxes this year (*note: when I say "tax" I mean fed, social, med, and state - I'm looking for a total % of all reductions taken from your paycheck).

More specifically, I'm looking for data on these markets (and yes, I'm too lazy to look this up myself) :

1) CA
2) TX
3) IL
4) DC

Any input at all will be appreciated!

Bob23

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Re: Fist Year Associates: Expected Total Tax Payout (by Market)
« Reply #1 on: October 12, 2008, 06:09:42 PM »
I crunched the numbers, using IRS tax tables and state information, for NYC, DC, and IL and I came up with the following average tax rates:

NYC -     41%
Chicago - 35%
DC -      39% (37% if you live in VA)

This is based on a joint income of ~$210k, married filing jointly
 

nealric

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Re: Fist Year Associates: Expected Total Tax Payout (by Market)
« Reply #2 on: October 12, 2008, 09:19:37 PM »
paycheckcity.com has a calculator

160k in NYC will take home 95k after taxes.
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Majmun

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Re: Fist Year Associates: Expected Total Tax Payout (by Market)
« Reply #3 on: October 12, 2008, 09:22:04 PM »
I crunched the numbers, using IRS tax tables and state information, for NYC, DC, and IL and I came up with the following average tax rates:

NYC -     41%
Chicago - 35%
DC -      39% (37% if you live in VA)

This is based on a joint income of ~$210k, married filing jointly
 


For NYC you must also include the evil known as city tax (applicable if you live in the city) for married filing jointly this is $3,071 plus 3.648% of excess over $90,000

T. Durden

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Re: Fist Year Associates: Expected Total Tax Payout (by Market)
« Reply #4 on: October 13, 2008, 11:11:40 PM »
i'm a first year associate in NYC (160 base) and am on pace to pay 39.9% of my income out in taxes. a couple of things to remember:

1) 39.9% is a slight inflated figure. under the current tax paradigm, an earner of 160k (who pays the mandated 6.2% in social security every pay period) caps out on his/her social security contributions in august. This means that you (only) contribute a total of 4.0% from your aggregate income to social security. thus, in practice, (taking my #ers as an example), you only pay 39.9-2.2, or 37.7% in taxes. i've heard some talk from some of our attnys that the continued application of the social sec cap is dependent upon the election (so there might be a 2.2% swing; i don't know).

2) 3.6% of your aggregate income is paid out in the form of a city tax. you can easily avoid this by moving across the river. if you do this, you now have: 37.7-3.6, or 34.1%.

so say, hypothetically speaking, that barack/mccain decides against / is incapable of rejecting the soc sec cap and i move to hoboken (or jersey city, etc.), i can still work in NYC and only pay out 34% of my income in taxes. not too bad.

anyone know how bonuses are taxed in NYC? i heard that bonuses are taxed at 50%. seems egregious. rumor? fact?

thorc954

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Re: Fist Year Associates: Expected Total Tax Payout (by Market)
« Reply #5 on: October 13, 2008, 11:16:20 PM »
T.Durden, I know at least at the federal level the tax is the same on bonuses as it is on regular compensation.  I would assume it is the same at the city/state level.  I could be wrong though.

T. Durden

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Re: Fist Year Associates: Expected Total Tax Payout (by Market)
« Reply #6 on: October 13, 2008, 11:22:57 PM »
so ~50% makes sense then. anything that you take in beyond 160 would most likely be taxed as earnings within that bracket. my #ers are admittedly fuzzy here, but i think that anything 145ish (maybe 150ish) plus is in the 38-39% federal bracket. couple this fed tax with a the normal state tax and you're at 50, if not beyond.

thorc954

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Re: Fist Year Associates: Expected Total Tax Payout (by Market)
« Reply #7 on: October 13, 2008, 11:39:47 PM »
yea, so that makes sense.  I know I put into one of those calculators and the pay in new york (160K + 40K) yields about 112K after state/federal/city taxes.

T. Durden

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Re: Fist Year Associates: Expected Total Tax Payout (by Market)
« Reply #8 on: October 14, 2008, 07:09:41 PM »
... which is f*cking ridiculous IMHO. there's not much point in sacrificing on weekends, giving up vacation time, etc. to take home 17k of a 40k bonus. i'm taking my 3 weeks vaycay ;).

thorc954

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Re: Fist Year Associates: Expected Total Tax Payout (by Market)
« Reply #9 on: October 14, 2008, 07:30:09 PM »
... which is f*cking ridiculous IMHO. there's not much point in sacrificing on weekends, giving up vacation time, etc. to take home 17k of a 40k bonus. i'm taking my 3 weeks vaycay ;).

hahah, agreed.  I will be trying my best to get my 4 weeks in.  Thank God for lock step bonuses.

I just hope the taxes dont go up with whoever comes into power next.