Reply to 400k salary and creep factor we never really have much left

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[quote=Anonymous][quote=Anonymous][quote=Anonymous]It's easy to spend 400k when taxes takes almost half [/quote]

Please explain how taxes would take up half. Also please read up on how we have a progressive tax system in the US.[/quote]

I was just coming to say that if you a paying almost half in taxes, then you are doing your taxes wrong.

At the basic tax rates of the progressive tax system, the taxes on $400,000 would be $85,664, which is a 21.4% tax rate.  Even if you were to use the highest tax bracket that OP is paying, that rate is 32%, but 32% is only on the top 36K of the income.  Everything below $364,200 is paid at a lower variable tax rate.  And that is with absolutely no adjustments or deductions.

OP has retirement contributions which are deducted before taxes.  Also a mortgage interest deduction and charitable contributions.  OP also has childcare deductions and probably several other deductions.  OP probably has enough deductions to avoid the standard deduction and with itemized deductions will probably drop most of the  income paid at 32% rate.

It is most likely that OP is paying around 19-21% taxes on that income.  If not, they are doing something wrong and should get an accountant to review their taxes.

I agree with PP that the first PP really needs to read up on the progressive tax system.[/quote]

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