Understanding Your Complete Tax Picture
Total tax burden includes federal income tax (10-37% marginal rates), state income tax (0-13.3%), Social Security (6.2% up to $168,600 in 2025), Medicare (1.45% plus 0.9% on income over $200,000), and local taxes (city, county, property).
A $100,000 earner in California pays approximately $7,500 federal income tax, $10,000 state tax, $6,200 Social Security, $1,450 Medicare, plus local taxes—total around $25,000-$30,000 (25-30% effective rate).
However, marginal rates differ from effective rates: the 24% federal bracket applies only to income in that range, not all income.
Tax optimization strategies include maximizing pre-tax retirement contributions ($23,000 401k, $7,000 IRA for 2025), using HSAs ($4,150 individual, $8,300 family for 2025), claiming all eligible deductions and credits, and harvesting tax losses in investment accounts.
Understanding your complete tax picture helps with financial planning, job offer comparisons (take-home pay), and retirement planning (future tax rates).
State residency matters significantly—moving from California (13.3% top rate) to Texas or Florida (0% state tax) saves $13,300 annually on $100,000 of top-bracket income.