I just got out of college, still live with the parents (saving up money) been employed for a year in the industry, and got a not bad starting salary. First check I received was shocking, to see 28.5% cut off for Federal + MA State + SS Employee. And this is prior to enrolling in the 401k.

Is that normal?

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    moneychimp.com/features/tax_brackets.htm - "Normal" depends on your tax bracket – WernerCD Aug 6 '13 at 22:18
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    Sounds very low to me. When I got my first salary, I was shocked at how small the fraction cut off for taxes was. Living and working in Sweden, I was under the impression that taxes would be high. You did not specify whether you are shocked at how high it is, or shocked at how low it is. – gerrit Aug 7 '13 at 9:58
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    Omg only 28.5%? AFAIK here in Italy the normal rate is around 50% for decent salaries, and 28.5% would be considered very low even for the lowest salary(above the minimum limit for taxation obviously) – Bakuriu Aug 7 '13 at 10:03
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    Welcome to the workforce. That first paycheck is a hard life lesson. Government isn't free. – JohnFx Aug 9 '13 at 21:28
  • wish mine were that low. Wish it would go below 50%. Note to self: move out of California. – rocketman Oct 15 '17 at 21:47

Is that normal?

Yes. It's in fact pretty low. Just the FICA taxes you pay are ~7.5%, so you're paying ~21% for State and Federal. Pretty reasonable, especially if you live in a high-tax state (which MA is ~5.3% on all income).

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    Social security and Medicare add to 7.65%. Add MA tax and we're at 13.95%. So OP's federal average rate is just under 15%. That happens when deep enough into the 25% bracket to average up the 10% as well as the effect of the std deduction and exemption. – JTP - Apologise to Monica Aug 6 '13 at 18:16
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    @JoeTaxpayer don't forget - this is withholding, not the actual tax – littleadv Aug 6 '13 at 18:22
  • good point. His withholding may be dead on, or not so much. He should read up on tax brackets and W4 form. – JTP - Apologise to Monica Aug 6 '13 at 18:39
  • And your employer is paying the other 7.65% of social security and Medicare for you. If you were a contractor you'd pay almost 16% plus taxes. – J.Money Apr 26 '16 at 19:58

Yep. You're single, you're possibly still a dependent on your parent's taxes (in lieu of rent), and you're finally bringing home bacon instead of bacon bits. Welcome to the working world.

Let's say your gross salary is the U.S. median of $50,000. With bi-weekly checks (26 a year; common practice) you're getting $1923.08 per paycheck. In the 2013 "Percentage Method" tax tables, here's how your federal withholding is calculated as a single person paid biweekly:

At Least:   But less than:  Base W/H Amount:   Marginal Percentage: 
$85         $428            $0.00              10%
$428        $1,479          $34.30             15% 
$1,479      $3,463          $191.95            25% 
$3,463      $7,133          $687.95            28% 
$7,133      $15,406         $1,715.55          33% 
$15,406     $15,469         $4,445.64          35% 
$15,469                     $4,467.69          39.6% 

Federal taxes are computed piecewise; the amount up to A is taxed at X%, then the amount between A and B is taxed at Y%, so if you make $C, between A and B, the tax is (A*X) + (C-A)*Y. The amount A*X is included in the "base amount" for ease of calculation.

Back to our example; let's say you're getting $1923.08 gross wages per check. That puts you in the 25% marginal bracket. You pay the sum of all lesser brackets (which is the "base amount" of the 25% bracket), plus the 25% marginal rate on every dollar that falls within the bracket. That's 191.95 + (1923.08 - 1479) * .25 = 191.95 + (444.08 * .25) = 191.95 + 111.02 = $302.97 per paycheck. The "effective" tax rate on the total amount, as if you were being charged a flat tax, is 15.75%, and this is just for the federal income tax.

Add to this MA state income taxes (5.25% flat tax), FICA (aka Medicare; 1.45% flat) and SECA (aka Social Security; 6.2% up to a "wage base" that $50k doesn't even approach), and your effective tax rate on each dollar you earn is 15.75% + 5.25% + 1.45% + 6.2% = 28.65%. This doesn't include any state unemployment taxes that may be withheld separately, but as the rate I come up with is pretty darn close to what you've figured (meaning I slightly overestimated your gross income and thus your effective tax rate), my bet is that SUTA's either employer-paid in MA, or it's just part of MA state income tax.

It gets better, at least at the federal level:

  • The amount of your state income taxes is tax-deductible at the federal level if you itemize your deductions. That may not be a factor for you as you'd have to come up with more than $6,100 of other tax-deductible expenses to make itemizing the better option than taking the standard deduction (big-ticket items are mortgage expenses other than principal payments, hospital stays such as for childbirth or major accident, and state and local taxes such as sales, property and income).

  • If you can claim yourself as a dependent (meaning your parents can't), then $150 of each check ($3,900 of your annual salary) is no longer taxed for federal withholding, lowering the amount of money taxed at the 25% marginal rate. You effectively save $37.50 biweekly ($975 annually) in taxes.

  • Get married and file jointly, and your spouse, her personal exemption, and an extra standard deduction amount (if you don't itemize) go on your taxes. The tax rates for married couples filing jointly are also lower; they're currently calculated (or were in 2012) to be the same as if two equal earners were to file separately, so if your spouse doesn't work, your taxes on the single income are calculated at the rates you'd get if you earned half as much. It doesn't work out to half the taxes, but it is a significant "marriage advantage".

  • Have kids, and each one is another little $3,900 tax write-off. It's nowhere near the cost of having or raising the child, but it helps, and having kids isn't about the money.

  • Owning a home, making charitable deductions, having medical expenses, etc are a toss-up. The magic number in 2013 is $12,200 for a married couple, $6,100 for a single person. If your mortgage interest, insurance premiums, property taxes, medical expenditures, charitable donations, any contributions from your take-home pay to a tax-deferred savings account (typically these accounts are paid into by your employer as a "pre-tax deduction" and never show up as taxable income, but you could just as easily move money from your take-home pay into tax-deferred savings) and any other tax-deductible payments add up to more than 12 large, then itemize. If not, take your standard deduction. As a single taxpayer just starting out in life, you probably don't have any of these types of expenditures, certainly not enough to give up the SD.

I did the math on my own taxes in 2012, and was surprised at how little the government actually gets of my paycheck when all's said and done. Remember back in the summer of 2012 when everyone was mad at Romney for making millions and only paying an effective income tax rate of 14%, which was compared to the middle class's marginal rate of 25-28%? Well, my family of 3, living on a little more than the median income from one earner (me), taking the married standard deduction, three personal exemptions, and a little extra for student loan interest, paid an effective federal income tax rate of something like 3.5%. Of course, the FICA and SS taxes don't allow any deductions (not even for retirement savings), so add in the 4.2% SS (in 2012) and 1.45% FICA and the full federal gimme was more like 9-10%.

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    "Have kids, and each one is another little $3,900 tax write-off. It's nowhere near the cost of having or raising the child, but it helps, and having kids isn't about the money." Oh, now they tell me! And here I thought having kids was an investment, like a 401k. Aren't they supposed to support me in my old age? – Jay Jul 28 '14 at 20:50
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    I had several. Basically trying to set up my on "ponzi scheme" to replace social security in case it fails by the time I retire. So it's kind of like an investment. – NotMe Jul 8 '16 at 14:32
  • Small correction: FICA includes both Social Security 'OASDI' (since 1937) and Medicare (since 1966); half of each is taken from your pay as an employee (originally only 'industrial' but today nearly all) and the other half paid by the employer and not visible on your pay stubs and W-2 -- although as Jay says the employer would probably increase your pay otherwise. SECA is a separate law that collects equivalent taxes from self-employed people since 1954. Note the reduced employee share (only) of SS 4.2% instead of 6.2% was 2011 and 2012 only; it's now back to 'normal'. – dave_thompson_085 Jul 8 '16 at 23:56

Yes that is not an unusual number.

In some states the state tax rate is fairly flat, and unless you are highly paid the social security and medicare taxes are also flat. The big issue is the federal number.

Several things can make make the federal taxes for the early paychecks larger than normal.

  • It is before the 401K starts.
  • It is before the insurance deductions start.

later checks will include these pretax amounts which will reduce the taxable income, and the taxes. Though the net check will get smaller.

Keep in mind that the size of the checks your first year are impacted by the fact that most recent graduates start in the summer. The tax tables assume that each of the paychecks you receive will be essentially the same. For those recent graduates the 1st real paycheck dwarfs the average paycheck for the first part of the year. This can put you in a higher bracket than you should be, and result in a large refund when you file in the spring. You can adjust your withholding numbers after a few checks to counterbalance this. Of course the numbers will need to be changed back in year two to to avoid under withholding.

  • Good point about withholding. I think the algo most companies use is to assume you get the same paycheck for the entire year; hence, if you only work half a year, much more will be withheld than is needed. – AndrewS Aug 9 '13 at 20:16

Yes, it is normal. I'm single & pay 32% in North Carolina. Single men & married people ask me all the time why it's so high and it gets frustrating having to explain to average people. I assume it's because I have no kids, live alone, don't own a house, am not in school, am not self employed etc. I've been at this job for 10 years and it's been over 30% since I can remember.

  • Yup. Same here. 30+% tax rate. – CHendrix Jul 8 '16 at 16:53

Welcome to the real world. BTW, you have far too rosy a view of this if you think you're only paying 28.5% of your income in taxes.

Remember that your employer theoretically pays half your FICA tax. But as far as they're concerned, that's part of the cost of having you as an employee. If FICA was abolished, supply and demand would quickly push salaries up by an amount equal to the FICA tax. So add another 7.65% to your taxes. Plus your employer has to pay unemployment tax (federal unemployment tax is $420 per employee per year, states vary) and workman's compensation tax (no idea how much that is) for the privilege of having you as an employee.

You likely pay sales taxes on most everything you buy. I believe sales tax in Massachusetts is 6.25%. Assuming you pay that on only half of what you buy, add another 3% or so.

Do you work for a corporation? Between when they sell the fruits of your labor and when they pay you, they have to pay corporate income tax. There are a lot of deductions so that gets complicated, but figure another few percent.

Do you drive a car? You're paying gas tax -- 41.9 cents per gallon in MA. Do you smoke or drink alcohol? Extra taxes on those. Travel by plane or stay in a hotel? More special taxes.

When you get around to buying a house, you'll pay property taxes on it every year, year after year. For me in Michigan that's another 3% of my income. I understand it's a lot more in Massachusetts.

Etc, many other smaller taxes that add up.

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    Fun read, but this isn't at all relevant to the current situation and notes regarding sales tax and other expenditures are not relevant to OP's question, which specifically asked about money withheld from net income – Noah Jul 29 '14 at 1:10