6 ms·

Anecdote: I'm a Sr. Staff Engineer at a large employer in a LCOL city. Typical middle class houses cost $300k - $500k here, with luxury houses costing roughly $

Anecdote: I'm a Sr. Staff Engineer at a large employer in a LCOL city. Typical middle class houses cost $300k - $500k here, with luxury houses costing roughly $1m and small starter homes costing $200k (just using real estate as a rough proxy for cost of living). My base salary is $150k/yr. My cash bonus maxes out somewhere around $80k/yr, and typically falls in the $50k - 70k range. I also receive equity worth roughly $12k - $15k per year. Counting in the value of benefits, my comp package is worth roughly $280k - $300k/yr. I am extremely well paid for the area I live in. It's very unlikely that I could make more money without moving to a different metro, getting lucky with a remote position, or going into niche contracting. Just throwing this out there, because a $250k salary (plus bonus) is doing well even in a HCOL area.

orochimaaru 2y ago
[flagged]
- coev 2y ago
  Tax rates are marginal, this is wrong.
- TimPC 2y ago
  You don't understand how tax brackets work. You never make less money by moving up a bracket. The bracket rate only applies to income within the bracket.
  - medvezhenok 2y ago
    The more correct statement is "you never pay more in taxes by moving up a bracket" - though even that is not correct in all cases. There are a lot of things (IETC for example, or benefits, or health insurance) which have $ cutoffs. Or tax breaks (i.e. electric vehicle credit) that only apply below a certain income. Exceeding those fixed points can certainly make you make less money. One thing I ran into recently was fiscal incentives for homeownership (though not directly related to taxes) - there is a cutoff at a certain income level where if you stay below it you get a $10K credit towards closing costs. The tax code is full of things like that.
    - reaperman 2y ago
      *EITC (nit)
  - smsm42 2y ago
    Taking into account only the federal income tax brackets, this is true. But tax cliffs exist, e.g. see: https://smartasset.com/financial-advisor/tax-cliff https://smartasset.com/financial-advisor/tax-cliff so accounting for all taxes and other factors, there could be a situation where you earn more pre-tax, but end up with less after all is accounted for. For most high-earners it's less relevant as they are past of the most cliffs anyway, but sometimes things like losing access to IRA deductions may be a factor too.
- deleted 2y ago
  [deleted]
- KK7NIL 2y ago
  That's just not how taxes work: https://www.irs.gov/filing/federal-income-tax-rates-and-brackets https://www.irs.gov/filing/federal-income-tax-rates-and-brac...
- dvdbloc 2y ago
  In the USA this is not how tax brackets work. You are taxed on your income in each bracket at that rate, not overall
  - 698969 2y ago
    Out of curiosity, since you said "In the USA" specifically, is there any tax regime in these times where tax brackets don't work like this?
    - reaperman 2y ago
      They likely don’t know every country’s tax code and instead of confidently spreading misinformation like the above commenter, this commenter is being careful to only state facts they actually do know.
      - dvdbloc 2y ago
        Yes! Just didn’t want to assume every country in the world operated like the USA
    - disgruntledphd2 2y ago
      I have never heard of one. I believe that in the UK, because of caps on childcare benefits, a wage increase can actually decrease your take-home but generally marginal tax rates operate on marginal income.
- pasc1878 2y ago
  Rubbish. Suppose your salary is X and the level that 32% starts is M You get taxed on your first $X earnings at the lower rates. Then only the amount above the 32% mark ie X-M is taken at 32%. Thus everyone in the 32% band gets more money than those only in in the 24%.
- reaperman 2y ago
  [Edited to remove snark/barbs as per HN guidelines]. I am genuinely curious though - you seem like you've had a successful career and life. I typically assume people in your position are rather familiar with the basic math behind personal taxes, 401k's, HSA's, child tax credits, standard deductions vs. large charitable deductions, etc. I think I may have been grossly mischaracterizing a potentially large group of people and would love to hear about how you've handled your taxes since entering the workforce...and what you personally would attribute your misunderstanding of taxes to. I think that would help me better understand and empathize with people who aren't like me.
  - brodouevencode 2y ago
    ~Calm down. It's a common misconception.~
    - QuercusMax 2y ago
      It's a common misconception among people who haven't done even the slightest bit of research. Or done their taxes themselves. Confidently stating stuff that is obviously false SHOULD be ridiculed.
      - brodouevencode 2y ago
        https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html No, they shouldn't.
      - xeromal 2y ago
        Seems strange that ridicule should be your instinct rather than simple education
        berdario 2y ago
        An educative reply is easier to ignore than a (or multiple) replies in which you're ridiculed. Moreover, being thought about how you're wrong about X might not necessarily translate in the subject being more careful before confidently expressing themselves on a Y topic on which they don't know anything about. Hopefully, ridiculing might make the subject reconsider that part of their character. That said, the HN policies recommend to "be kind"... I have no idea how to "ridicule someone's post in a kind way" ¯\_(ツ)_/¯
- redblacktree 2y ago
  That's not how tax brackets work, but it is a common misconception. If you salary goes up, your take-home goes up, full stop. If you are making $191,950/year (the very top end of the 24% bracket for 2024) you will pay $39,110.50 in federal income tax, (before any deductions) for a net of $152,839.50. (You may notice that this is less than 24%) If you make an additional $1,000/year: $192,950, only the additional $1,000 is taxed at the 32% rate. Which makes your total federal income tax bill $320 more, and improving your net take-home to $153,519.50 Edit to add: I'm disappointed that sibling comments to mine are so degrading. We all had to learn this at some point.
  - freestyle24147 2y ago
    I'm not disappointed. This is a classic case of someone who knows nothing about a topic making confident statements that will undoubtedly spread. People who do this should absolutely be ridiculed to discourage spreading total nonsense. And to be clear we're not talking about some esoteric subject -- this is the most basic part of how your salary is taxed by the US government.
  - jtbayly 2y ago
    There are cases where if your salary goes up, your take-home goes down, especially for lower income levels. It’s just not on the basis of tax brackets. There are means-tested benefits that you can lose if you cross certain income levels where an increase in income of $5 can cost you thousands of dollars.
    - medvezhenok 2y ago
      Yup. Most are for lower income levels but some affect middle class & up as well (electric vehicle credits, financial aid for university, first time homeowner credits, or affordable homeownership breaks... etc)
- Der_Einzige 2y ago
  [flagged]
  - dang 2y ago
    Please don't break the site guidelines like this, no matter how wrong someone is or you feel they are. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html Edit: this has been a problem for a long time: https://news.ycombinator.com/item?id=36668235 https://news.ycombinator.com/item?id=36668235 (July 2023) https://news.ycombinator.com/item?id=35416652 https://news.ycombinator.com/item?id=35416652 (April 2023) https://news.ycombinator.com/item?id=33118260 https://news.ycombinator.com/item?id=33118260 (Oct 2022) https://news.ycombinator.com/item?id=29289394 https://news.ycombinator.com/item?id=29289394 (Nov 2021) https://news.ycombinator.com/item?id=22863165 https://news.ycombinator.com/item?id=22863165 (April 2020) https://news.ycombinator.com/item?id=22837452 https://news.ycombinator.com/item?id=22837452 (April 2020) https://news.ycombinator.com/item?id=22570732 https://news.ycombinator.com/item?id=22570732 (March 2020) https://news.ycombinator.com/item?id=22543673 https://news.ycombinator.com/item?id=22543673 (March 2020) https://news.ycombinator.com/item?id=22543657 https://news.ycombinator.com/item?id=22543657 (March 2020) That's not cool. I don't want to ban you, so if you'd please review https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html and fix this for good, we'd appreciate it.
    - deleted 2y ago
      [deleted]
- sys_64738 2y ago
  Your marginal dollars are taxed at the rate they fall into. So even if you get paid another $200k on top of what you already earn, that additional $200K is taxed on top of your unchanging lower tax rates.
- gregors 2y ago
  You actually get a tax break after $168,600. After that you no longer get taxed for Social Security.
  - Sohcahtoa82 2y ago
    That tax limit should be removed IMO.
- rconti 2y ago
  This is a completely incorrect understanding of tax brackets. If you make $1 more than your 'old' bracket, you only get taxed 32% on that $1.
- Bluescreenbuddy 2y ago
  That's not how that works. At all. It's marginal. jfc how are we still parroting this falsehood
thayne 2y ago
> Typical middle class houses cost $300k - $500k here, with luxury houses costing roughly $1m and small starter homes costing $200k (just using real estate as a rough proxy for cost of living) That used to be the case where I live, just a few years ago. Now what used to be a starter home is over $400k.
just_testing 2y ago
Thanks for a comment from outside of the bubble
spicysausage 2y ago
These threads always surprise me. I'm a director of software engineering in a medium sized company (~3k employees) not located in a big metro but with plenty of people working from competitive areas (I am in the Seattle area myself). My base is a bit over $200k with a 20% bonus and some stock options. I know I'm on the higher end compared to my peers, and I know what my direct and indirect reports make. My wife works for a huge aerospace company as a senior manager and makes about the same as I do. I have a bunch of other people I know what they make, including a very senior engineer at a FAANG company who with 600k this year (everything included) is the highest compensated person I know personally. It's amazing how people throw around 500K like it's nothing. I'm either doing things very wrong/ am clueless or there's some weird bias for crazily over-compensated people in threads here.
- deleted 2y ago
  [deleted]
- rrgok 2y ago
  Yeah me too, I'm having hard time going above 100K. Yes, I don't live in the US. But damn...

orochimaaru 2y ago

[flagged]

coev 2y ago
Tax rates are marginal, this is wrong.
TimPC 2y ago
You don't understand how tax brackets work. You never make less money by moving up a bracket. The bracket rate only applies to income within the bracket.
- medvezhenok 2y ago
  The more correct statement is "you never pay more in taxes by moving up a bracket" - though even that is not correct in all cases. There are a lot of things (IETC for example, or benefits, or health insurance) which have $ cutoffs. Or tax breaks (i.e. electric vehicle credit) that only apply below a certain income. Exceeding those fixed points can certainly make you make less money. One thing I ran into recently was fiscal incentives for homeownership (though not directly related to taxes) - there is a cutoff at a certain income level where if you stay below it you get a $10K credit towards closing costs. The tax code is full of things like that.
  - reaperman 2y ago
    *EITC (nit)
- smsm42 2y ago
  Taking into account only the federal income tax brackets, this is true. But tax cliffs exist, e.g. see: https://smartasset.com/financial-advisor/tax-cliff https://smartasset.com/financial-advisor/tax-cliff so accounting for all taxes and other factors, there could be a situation where you earn more pre-tax, but end up with less after all is accounted for. For most high-earners it's less relevant as they are past of the most cliffs anyway, but sometimes things like losing access to IRA deductions may be a factor too.
deleted 2y ago
[deleted]
KK7NIL 2y ago
That's just not how taxes work: https://www.irs.gov/filing/federal-income-tax-rates-and-brackets https://www.irs.gov/filing/federal-income-tax-rates-and-brac...
dvdbloc 2y ago
In the USA this is not how tax brackets work. You are taxed on your income in each bracket at that rate, not overall
- 698969 2y ago
  Out of curiosity, since you said "In the USA" specifically, is there any tax regime in these times where tax brackets don't work like this?
  - reaperman 2y ago
    They likely don’t know every country’s tax code and instead of confidently spreading misinformation like the above commenter, this commenter is being careful to only state facts they actually do know.
    - dvdbloc 2y ago
      Yes! Just didn’t want to assume every country in the world operated like the USA
  - disgruntledphd2 2y ago
    I have never heard of one. I believe that in the UK, because of caps on childcare benefits, a wage increase can actually decrease your take-home but generally marginal tax rates operate on marginal income.
pasc1878 2y ago
Rubbish. Suppose your salary is X and the level that 32% starts is M You get taxed on your first $X earnings at the lower rates. Then only the amount above the 32% mark ie X-M is taken at 32%. Thus everyone in the 32% band gets more money than those only in in the 24%.
reaperman 2y ago
[Edited to remove snark/barbs as per HN guidelines]. I am genuinely curious though - you seem like you've had a successful career and life. I typically assume people in your position are rather familiar with the basic math behind personal taxes, 401k's, HSA's, child tax credits, standard deductions vs. large charitable deductions, etc. I think I may have been grossly mischaracterizing a potentially large group of people and would love to hear about how you've handled your taxes since entering the workforce...and what you personally would attribute your misunderstanding of taxes to. I think that would help me better understand and empathize with people who aren't like me.
- brodouevencode 2y ago
  ~Calm down. It's a common misconception.~
  - QuercusMax 2y ago
    It's a common misconception among people who haven't done even the slightest bit of research. Or done their taxes themselves. Confidently stating stuff that is obviously false SHOULD be ridiculed.
    - brodouevencode 2y ago
      https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html No, they shouldn't.
    - xeromal 2y ago
      Seems strange that ridicule should be your instinct rather than simple education
      - berdario 2y ago
        An educative reply is easier to ignore than a (or multiple) replies in which you're ridiculed. Moreover, being thought about how you're wrong about X might not necessarily translate in the subject being more careful before confidently expressing themselves on a Y topic on which they don't know anything about. Hopefully, ridiculing might make the subject reconsider that part of their character. That said, the HN policies recommend to "be kind"... I have no idea how to "ridicule someone's post in a kind way" ¯\_(ツ)_/¯
redblacktree 2y ago
That's not how tax brackets work, but it is a common misconception. If you salary goes up, your take-home goes up, full stop. If you are making $191,950/year (the very top end of the 24% bracket for 2024) you will pay $39,110.50 in federal income tax, (before any deductions) for a net of $152,839.50. (You may notice that this is less than 24%) If you make an additional $1,000/year: $192,950, only the additional $1,000 is taxed at the 32% rate. Which makes your total federal income tax bill $320 more, and improving your net take-home to $153,519.50 Edit to add: I'm disappointed that sibling comments to mine are so degrading. We all had to learn this at some point.
- freestyle24147 2y ago
  I'm not disappointed. This is a classic case of someone who knows nothing about a topic making confident statements that will undoubtedly spread. People who do this should absolutely be ridiculed to discourage spreading total nonsense. And to be clear we're not talking about some esoteric subject -- this is the most basic part of how your salary is taxed by the US government.
- jtbayly 2y ago
  There are cases where if your salary goes up, your take-home goes down, especially for lower income levels. It’s just not on the basis of tax brackets. There are means-tested benefits that you can lose if you cross certain income levels where an increase in income of $5 can cost you thousands of dollars.
  - medvezhenok 2y ago
    Yup. Most are for lower income levels but some affect middle class & up as well (electric vehicle credits, financial aid for university, first time homeowner credits, or affordable homeownership breaks... etc)
Der_Einzige 2y ago
[flagged]
- dang 2y ago
  Please don't break the site guidelines like this, no matter how wrong someone is or you feel they are. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html Edit: this has been a problem for a long time: https://news.ycombinator.com/item?id=36668235 https://news.ycombinator.com/item?id=36668235 (July 2023) https://news.ycombinator.com/item?id=35416652 https://news.ycombinator.com/item?id=35416652 (April 2023) https://news.ycombinator.com/item?id=33118260 https://news.ycombinator.com/item?id=33118260 (Oct 2022) https://news.ycombinator.com/item?id=29289394 https://news.ycombinator.com/item?id=29289394 (Nov 2021) https://news.ycombinator.com/item?id=22863165 https://news.ycombinator.com/item?id=22863165 (April 2020) https://news.ycombinator.com/item?id=22837452 https://news.ycombinator.com/item?id=22837452 (April 2020) https://news.ycombinator.com/item?id=22570732 https://news.ycombinator.com/item?id=22570732 (March 2020) https://news.ycombinator.com/item?id=22543673 https://news.ycombinator.com/item?id=22543673 (March 2020) https://news.ycombinator.com/item?id=22543657 https://news.ycombinator.com/item?id=22543657 (March 2020) That's not cool. I don't want to ban you, so if you'd please review https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html and fix this for good, we'd appreciate it.
  - deleted 2y ago
    [deleted]
sys_64738 2y ago
Your marginal dollars are taxed at the rate they fall into. So even if you get paid another $200k on top of what you already earn, that additional $200K is taxed on top of your unchanging lower tax rates.
gregors 2y ago
You actually get a tax break after $168,600. After that you no longer get taxed for Social Security.
- Sohcahtoa82 2y ago
  That tax limit should be removed IMO.
rconti 2y ago
This is a completely incorrect understanding of tax brackets. If you make $1 more than your 'old' bracket, you only get taxed 32% on that $1.
Bluescreenbuddy 2y ago
That's not how that works. At all. It's marginal. jfc how are we still parroting this falsehood

thayne 2y ago

> Typical middle class houses cost $300k - $500k here, with luxury houses costing roughly $1m and small starter homes costing $200k (just using real estate as a rough proxy for cost of living) That used to be the case where I live, just a few years ago. Now what used to be a starter home is over $400k.

just_testing 2y ago

Thanks for a comment from outside of the bubble

spicysausage 2y ago

These threads always surprise me. I'm a director of software engineering in a medium sized company (~3k employees) not located in a big metro but with plenty of people working from competitive areas (I am in the Seattle area myself). My base is a bit over $200k with a 20% bonus and some stock options. I know I'm on the higher end compared to my peers, and I know what my direct and indirect reports make. My wife works for a huge aerospace company as a senior manager and makes about the same as I do. I have a bunch of other people I know what they make, including a very senior engineer at a FAANG company who with 600k this year (everything included) is the highest compensated person I know personally. It's amazing how people throw around 500K like it's nothing. I'm either doing things very wrong/ am clueless or there's some weird bias for crazily over-compensated people in threads here.

deleted 2y ago
[deleted]
rrgok 2y ago
Yeah me too, I'm having hard time going above 100K. Yes, I don't live in the US. But damn...