After two years of lackluster raises, techies are jockeying for larger increases in 2010. But before you march into your boss’s office to negotiate a higher salary, consider the tax implications. The extra income might place you among the country’s richest citizens – at least by IRS standards.
Earning $66,532 will place you in the top 25 percent of all earners, according to Kiplinger’s. That group paid 87 percent of the federal tax burden. So if you’re on the cusp of a higher bracket, your increase may end up in Uncle Sam’s coffers unless you calculate the tax impact before asking for your raise.
The data show that an income of $32,879 or more puts you in the top half of taxpayers. Earning a bit more than twice that much – $66,532 – earns you a spot among the top 25 percent of all earners. You crack the elite top 10 percent if you earn more than $113,018. And $410,096 buys top bragging rights: Earn that much or more and you’re among the top 1 percent of all American earners.
You can see how your salary measures up to others, and what percentage of the total tax burden you bear, by entering your adjusted gross income from your 2007 tax return into Kiplinger’s online calculator. Use the data along with current tax tables when estimating the tab for your new salary, so you won’t be surprised if your long-anticipated raise is consumed by the taxman.
— Leslie Stevens-Huffman