Real Tax Rate

In the corporate sector, each individual is responsible for paying back a certain amount to the government or the state. This is generally termed as the tax rate and the amount payable is contingent upon a set rate that is determined by the government. The real tax rate is a percentage of what the individual pays and what the employer pays on the salary.

This implies that the salary one negotiates isn’t the amount they end up receiving in their paychecks. Oftentimes, salary comparisons in different countries do not take account of tax rates. However the higher a country’s tax rate, the larger the difference among annual pay and take-home pay once taxes are deducted.

Let’s look at the difference in amount being paid in a number of countries on two diverse income rates; $50,000 and $100,000.

If you are earning $50,000 annually living in New York, USA, you will be paying $10,597 real tax. This exhibits that an individual’s net pay will be $39,403 per annum. The average tax rate is 21.2% whereas the real tax rate also adds the amount your employer pays when they pay you $50,000. In this scenario, it costs the employer $4,125; making the real tax rate 27.2% which is 6% higher than the average tax rate.  

On the contrary if an individual is making $100,000 every year in the same region, they will be taxed $28,718. This means that their monthly net pay would be $5,940. Upon calculations from Neuvoo it can be seen that the average tax rate in this situation would be 28.72%. But with you and the employer both paying tax, the real tax rate goes to 34.2%, making it 5.5% higher. This shows that the higher the income rate, the lower the real tax rate.

Similarly, if you reside in Luxembourg and earn 50,000 € a year, you will be taxed 27,218 €. According to the software, the average tax rate is 54.44%. In order to calculate the real tax rate, it is seen that the employer pays 7,500 € to pay you a salary of 50,000 €. This makes the total percentage of contributions to be 60.4% and not 54.4%. It can be seen that the rate of real tax differs massively within two countries for the same salary. When it comes to 100,000 €, you will be taxed 54,443 €. In this situation the average and the real tax rate will remain the same, but it costs the employer 15,000 € to pay you this salary.

Whether you live in New York, Tokyo, Milan or any other part of the world and looking to calculate the average tax rate & real tax rate; then Neuvoo tax calculator is your go-to site. This calculator provides a detailed yet precise and easy to understand tax rates. Moreover, it also shows the net income earned in your preferred time intervals such as (yearly, monthly, weekly and even hourly). All you need to do is select the income you receive, add in the preferred period and just select the country you live in.

Enjoy a hassle free calculation of the salary after taxes!

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