9 ms·

Ask HN: Salary discussions – numbers are before or after taxes?

• metabro 5y ago
  It’s before taxes and it’s typically total comp: base + bonus + equity
• uberman 5y ago
  Always before, but you should also factor in local taxes and cost of living yourself when evaluating an offer.
  • nuerow 5y ago
    > Always before, but you should also factor in local taxes and cost of living yourself when evaluating an offer. I'd also like to stress that, along with taxes, there are also tax benefits in play, which are highly dependent on your personal circumstances and willingness to pursue them, and can also have a limited timespan. For instance, some European countries offer generous tax benefits to highly skilled professionals willing to relocate which are only applicable for a few years and require the employee to jump through a few hurdles to benefit from them. If we leave it to recruiters to do the tax math, unscrupulous recruiter might use that to create inflated expectations regarding net salary and disposable income.
• 41209 5y ago
  Always pre tax. Everything depends on the person. For example the same 2 people can make exactly the same, but live in 2 different states. And with state income tax is varying from 10% all the way down to 0%, this choice of locale can make a big difference
  • Amezarak 5y ago
    It's not just state income tax making a big difference, it's also health insurance! The employee contribution towards health insurance premiums has IME ranged from $0 to $10k. So even in the same state, two different employers paying the same gross salary could mean very different net salaries. Unfortunately, it's also a big pain in my experience to get companies to disclose this information before hiring.
    • 41209 5y ago
      Even so-called good health insurance can often have massive gaps. I'm exceptionally fortunate in that I make enough money to just pay out of pocket, if I was poor or even just working class I wouldn't be able to say drop $100 or so on an Uber ride to and out of the way doctor. I'd be skipping medicine when I can't make my co-pays, which for my extremely treatable conditions would make things much much worse. If I had one wish it would be to decouple healthcare from employment. No one should have a nightmare scenario where they get fired on Wednesday and next week can't afford their wife's heart medicine.
• UseStrict 5y ago
  Gross, always before taxes in Canada at least. Taxes vary by province, less confusing to not include any deductions.
• rsynnott 5y ago
  Here, it'll almost always be pre-tax; it's primarily a US-oriented site, and the US has a very complex personal tax regime (in particular, many, many common deductions) where two people with the same pre-tax income might commonly have a very different post-tax income.
• stephen_g 5y ago
  Generally before tax, especially in the context of annual salary. When talking about post-tax pay (“take home pay”) the convention in my country at least is to express that in weekly or fortnightly terms. For salary in my country (Australia) though, the figure usually doesn’t include superannuation (payments into a kind of third party pension fund) which is applied on top (legislated as a compulsory 10% on top of the wage).
• Bostonian 5y ago
  People quote pre-tax salaries. The after-tax salary depends not only on the taxing jurisdiction but on the spouse's income if any, since that affects the marginal tax bracket.
  • watt 5y ago
    Also deductions for kids can apply, all kinds of circumstances.
  • sampo 5y ago
    > The after-tax salary depends [...] on the spouse's income This is not true, in some countries. In the US it is true.
    • wil421 5y ago
      As another commenter pointed out this is a US based site and I would always assume it’s pretax salary. Even the Europeans who mention salaries will usually clarify if it is post tax.
      • sampo 5y ago
        My comment was about: In some countries your after-tax salary does not depend on your spouse. In those countries, people are taxed as individuals, not as a family unit.
    • long_time_gone 5y ago
      Unless you are married and file taxes separately. Another reason why salaries are referred to in pre-tax terms.
• CapitalistCartr 5y ago
  Taxes are too variable from person to person, so when I talk salary, I talk gross, and in my head I know about what my tax rate will be and I figure accordingly.
• HardwareLust 5y ago
  Always pre-tax. (Gross) There's far too many tax variables to discuss salaries at net level.
• dusted 5y ago
  I know in Estonia, it is always after taxes, since tax laws are sufficiently simple that people pay the same percentage. In Denmark it's always pre-tax, because tax laws are so complicated that not even the tax authority knows how much you'll end up paying, and so we have an "adjustment" after the fact where you'll either get to pay an amount more, or get an amount back.. It's hilariously sad.
  • atonse 5y ago
    I’m surprised to hear that Denmark has such a complex tax system. That seems like something the US/UK would have so they can place infinite carve outs for special interest groups.
    • jlokier 5y ago
      In fact the UK has something like that because of progressive taxation. The idea is that a tax system should be "progressive", meaning people who earn a high income should pay a higher percentage of their income in tax, and conversely people who earn very little should pay a low, zero or even negative percentage. Now imagine you work for two employers overlapping in time. E.g. one job in the daytimes and another in the evenings. Your employers don't know about each other, so your total earnings before tax will not be known by either employer, but you should pay a higher percentage of tax due to your higher total income. So the state has to be involved in the calculation.
    • dusted 5y ago
      We have progressive tax (which is complicated in itself, as you pay different rates on each paycheck, so, the first N amount, you pay 0% (bit it's not called that, ofc), then up to the next N, you pay some other percentage, and of the money after that N up to the next, you pay yet another percentage). Then we have for some reason, chosen to subsidize banks, by letting people not pay tax on the percentage of money they pay to the bank that constitutes the interest. Then there are a million other factors that might influence it.. On top of that, you're not actually only taxed for the amount of money you earn in a year, you're taxed by the amount of money you thought, last year, that you were going to earn this year.. and there's more, that I am ignorant about, because I just.. accept that it's a black box and either receive or pay the money they ask at the end of the tax year.
• dboreham 5y ago
  Whenever after-tax income is discussed, I've seen it clarified as "take-home". If that's not mentioned, then assume salary is gross. This isn't a US-centric thing -- I've never heard of anyone discussing after-tax income as "salary" in the UK, for example.
• cpach 5y ago
  In Sweden: Pre-tax.
• astura 5y ago
  Salary discussions are before taxes because your tax situation is highly personal in the US. I just ran some numbers An unmarried person making $150,000 In San Francisco would pay $37,816 in taxes for a net income of $112,184. If that same person was married with a non-working spouse the same person would pay only $29,836 in taxes for a net income of $120,164. This person could also legally reduce their tax burden by contributing to retirement accounts. Let's take the married San Franciscan if they maxed out their 401k contributions they'd pay $25,546 in taxes for a net income of $124,454. If they moved to Texas then they'd pay $25,546 in taxes, or a net of $124,454 Those are just no frills situations with standard deduction, employees can have itemized deductions that reduce their tax burden more. Calculations come from https://smartasset.com/taxes/income-taxes https://smartasset.com/taxes/income-taxes
• junon 5y ago
  Gross = before expenses/taxes. Net = after (which, specifically, depends on the context). Always negotiate your compensation in gross. Always negotiate hourly in hours, salary in years or months (most places prefer the former, but depending on your country it might be customary to discuss in the latter). A multiplication/division by 12 is usually sufficient. Hourly pay means you work time, you get paid for exactly that time (give or take 15 minutes sometimes, usually it's rounded, often up to the next hour). Payments usually made every two weeks or every month. Salaries are paid at a fixed frequency, usually monthly - sometimes, in very very rare cases, semiannually or even annually. Don't bother asking for a different pay schedule as it's generally company-wide and very difficult to change, and it also shouldn't affect you if you manage your own money correctly - the amount of money you make on average over time remains the same. The reason for gross is, as you mention, taxes. Your specific situation affects how much you contribute to your community/country (via taxes), and the percentage/amount usually changes over time as your living situation changes (you get married, have children, get a raise, etc). Your employer can't possibly know all of this in most cases (namely in the US, but also elsewhere) and also it's not their burden to manage your taxes (again, usually - namely in the US). Your job is "I do services, you pay me for those services". The company needs to know how much they're paying for your services. How that income breaks down for you is your own deal. Imagine a case where you're in a high tax bracket because you have a lot of successful side gigs. Your employer, paying net, would thus have to pay you more in order to keep the rate competitive for you, simply because you make more elsewhere. The employer loses out pretty heavily in this case. Just doesn't make much sense to do it that way.
  • BrandoElFollito 5y ago
    In France (and broadly speaking, in Europe) you are better off negotiating net before taxes. We have plenty of deductions from our gross that are compulsory, before getting to the net before taxes. It means that the x€ you hear is actually x€*0.6 or less. Bringing the number down to what actually hits your taxes (and then your bank account) makes the proposal look less grandiose.
    • Amezarak 5y ago
• soco 5y ago
  In Switzerland you would only discuss pre-taxes (gross) salaries, (also) because there's an arcane tax system muddling things up.
• antaviana 5y ago
  In Spain, gross is pre-tax and pre-social security (health, unemployement and retirement) but only for the employee side. The employer needs to pay an additional 25-30% on top of the gross salary for social security benefits but that amount is not included in the gross salary figure.
• samrolken 5y ago
  I am an American so I am used to gross. But I am working in the Balkans and I’ve learned that net salary is more commonly discussed here.
• redwood 5y ago
  In the US it's always pre tax and generally annual whereas in Europe it's often post tax and monthly in many cases. I respect the European model but the US model is not going away since taxes are situation dependent and culturally folks have a different attitude about taxes
• CodesInChaos 5y ago
  In Germany you negotiate the "gross" salary. But certain mandatory insurance payments (healthcare, unemployment, retirement, nursing) are split between employee (subtracted from gross) and employer (added to gross). So the direct cost to the employer is about 20% higher than the "gross" salary.
  • seattle_spring 5y ago
    That's true in the US as well.
    • rapjr9 5y ago
      Not always. At a college I worked at the contributions by the school to our health insurance cost was added to employees paychecks as a line item, then the amount of health insurance paid by the employee (a small percentage) subtracted, so the gross salary basically included most of but not all of the schools health contribution. This meant the employee ended up paying some taxes on the schools health contribution I believe. Every other employer I worked for did not show company health insurance contributions on the paycheck stub at all. Maybe this has changed recently (last 20 years?) because applicable laws have changed, or perhaps it only applies to nonprofits or schools? This had the advantage to the school that employees knew how much of a health benefit they were receiving, employees paychecks looked bigger (until you got to the take home part), and the school paid less taxes (not sure how, but that was the main reason they did it). It was basically an accounting trick to shift costs to employees, similar to the old trick of giving raises that match inflation; so employees think they are getting raises, and even if they notice the raise only matches inflation (difficult to tell if the business year doesn't match the physical year since official inflation figures for the entire year won't be published till later), what they don't realize is the raise only happens once a year so they are losing to inflation the rest of the year. A very sneaky way to take money away from employees and reduce company costs. I suspect this is part of how USA wages have been held flat for decades.
      • seattle_spring 5y ago
        I'm sure there's an edge case for everything, but 99.99% of the time in the US a quoted salary does not include employer-paid benefits, their part of SS, etc.