1

If I have X dollars in committed money each year (expenses, savings, investments, etc.), and I need to pay 30% income tax (simplifying), what is the formula for figuring what my income should be to cover my the costs?

I tried "income = expenses * 1.3", but that doesn't seem right to me because the 30% is on the lower expenses amount not on the total.

  • 2
    30% might be a marginal tax rate for some people, but (in the US, at least), I doubt that the net tax rate (total tax paid divided by gross income) is 30% for you. – Dilip Sarwate Dec 25 '16 at 0:18
4

To take home X with taxes of 30%, the remaining 70% of your income must equal or exceed X.

Income * 0.7 >= X

Income >= X / 0.7

More generally, that's income of needs/(100%-tax) or more. Basic algebra.

Note: This assumes you have calculated needs correctly (remember that costs differ in different places) and that you have included all taxes (in the US there are federal income taxes plus some mix of state and local income taxes.)

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.