$800,000 income tax calculator 2023 - California - salary after tax (2024)

Certainly! To start, let's dive into the concepts related to salary, tax rates, and calculations mentioned in the article.

Salary Rate Concepts:

1. Annual Salary: The total amount of money earned in a year before any deductions or taxes.
2. Monthly Salary: The amount earned in a month, calculated from the annual salary.
3. Biweekly Salary: Earnings every two weeks (26 pay periods in a year for biweekly).
4. Weekly Salary: Earnings per week, derived from the annual salary.
5. Daily Salary: Income per day, calculated based on the annual salary.

Taxation Concepts:

1. Withholding: The amount of money taken out of an employee's paycheck to cover taxes, which includes federal income tax, state income tax, Social Security, Medicare, and other applicable taxes.
2. Federal Income Tax: The tax imposed by the U.S. federal government on an individual's income.
3. State Income Tax: The tax imposed by individual states on earned income, varying by state.
4. Social Security: A federal program that provides retirement, disability, and survivor benefits.
5. Medicare: A federal health insurance program primarily for people aged 65 or older.
6. SDI (State Disability Insurance): A tax that provides partial wage replacement for eligible workers who are unable to work due to disabilities.

Tax Rate Metrics:

1. Marginal Tax Rate: The tax rate applied to the last dollar of income earned, representing the highest tax bracket an individual falls into.
2. Average Tax Rate: The total tax paid as a percentage of total income earned.

The article discusses the tax implications of a $800,000 annual salary in California, highlighting a total tax of $371,726, resulting in a net pay of $428,274 per year or $35,690 per month. It also mentions the marginal tax rate of 52.9% and the average tax rate of 46.5%.

Additionally, it provides examples of how bonuses affect net income, indicating that a $1,000 bonus generates an extra $471 of net income, and a $5,000 bonus results in an extra $2,356 of net income.

The tax brackets seem to be specific to California, as state income taxes vary across different states in the U.S.

Understanding these concepts can help individuals comprehend their earnings, taxes, and how bonuses might impact their net income, contributing to better financial planning and decision-making.