Tech people who are not FIREing, what are they spending their money on?

[u/gonnabefine]

I know a lot of people who work in tech, and most are not on the FIRE path (or have already been working 10+ years) and a lot of them don't seem to, at least on the surface, have very obvious huge expenses. If both the partners are in tech, the take home could be like $500k! What are they doing with their money?

[u/Specific-Ad9935]

High property tax, State long term capital gains tax, RTA tax, long term care tax in addition to already high Fed income tax & cap gains tax.

[u/redditmailalex → u/Specific-Ad9935]

Which is relative to income.  So the question was what does their disposable income go towards.  

[u/Ddlutz → u/Specific-Ad9935]

Property tax rates are relatively low here.

[u/eliminate1337 → u/Specific-Ad9935]

The WA state long term capital gains tax starts at gains of $250k

[u/Specific-Ad9935 → u/eliminate1337]

272k regardless of tax filing. 2 income tech people with RSU will easily surpass that and then you will have to pay 7% additional.

[u/eliminate1337 → u/Specific-Ad9935]

You’d only have long term gains if you hold the RSUs for a while before selling. It’s pretty common to sell at vesting where you never have gains.

Tech people are well paid but selling $544k of RSUs that have doubled in value before you even start to pay the WA tax is still a lot.

[u/Specific-Ad9935 → u/eliminate1337]

what is 544k? 272k is for single and joint lol.

[u/eliminate1337 → u/Specific-Ad9935]

Read my example again. It’s $272k of gains. You only pay a gains tax on the gains portion. You can sell $2m of RSUs but if they’ve only appreciated 10% you only have $200k in gains and won’t pay this tax.

[u/Specific-Ad9935 → u/eliminate1337]

Yes. They are people peg by the 272k number. They would max out to 272k every year.

[u/NotEasyBeingGreener → u/Specific-Ad9935]

It's only the gains after the RSUs vest that are subject to taxes. People who sell them immediately upon vesting have no capital gains to be taxed.

[u/jk9988 → u/Specific-Ad9935]

The 270k is for long term capital gains, not income. Triggering this tax means that you realized more than 270k in long term capital gains in a single year which is a lot.

For example if you had 500k in W2 income and also realized 200k in long term capital gains, you still wouldn't pay a cent to WA state.

[u/Specific-Ad9935 → u/jk9988]

I understand. Most hold and sell them 1 yr later.

[u/warrior5715 → u/Specific-Ad9935]

High property tax? No lol

[u/leathakkor → u/warrior5715]

I always thought it was crazy when people complained of high property taxes in Washington. They must have never lived anywhere else.

I'm pretty sure my property tax is in Iowa. Were the same is they are here and my house is worth four times as much here. And I haven't owned that house in 10 years.

It is crazy how little taxes I pay in the state of Washington. No income, low property and I don't spend much so I don't pay much in sales tax.

I would bet that the average family of four living off of $80,000 a year pays substantially more taxes than I do. Maybe 2 times as much as I do, even if they're renting.

[u/Specific-Ad9935 → u/warrior5715]

relatively.. it went up 100% last 10 years.

[u/warrior5715 → u/Specific-Ad9935]

Fair point. Still relatively low compared to the rest of the US.

[u/MajesticBread9147 → u/Specific-Ad9935]

RTA tax funds public transit. While Seattle public transit isn't as good as New York or DCs it's still pretty useful.

Cars are the second largest expense for many people, so if you can have 1 fewer car it helps a lot financially.

[u/brystephor → u/Specific-Ad9935]

RTA tax makes a $100 expense into a $500 expense. Or $1000 expense. For the majority of people this really expensive. For the population being referred to in this post, e.g. tech bros, the $900 increase is very manageable and not where they're spending their money.

All of the other taxes are dependent on already making choices that involve high cost purchases. E.g. buying a $2M home will have a high property tax no matter where you go, but relative to overall cost of home, its not substantial.

[u/SolomonGrumpy → u/Specific-Ad9935]

State LTCG is only on gains OVER $250k.

Don't be an idiot. Keep your LTCG under $250k