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> a state with no income tax

Please excuse a non-american asking a question, but doesn't this mean that no money gets paid into retirements as well? Or is that a federal tax?



There's a 6.2% federal tax for a government-backed pension (social security) that may or may not be around by the time people need it. Most Americans are responsible for their own retirement funding, usually via an employer sponsored plan (401k and others)

Either way, it has nothing to do with a state-level income tax.


whats federal income tax on 400k? Any other Federal taxes on top of income tax and socials


72-111k depending on marital status, house mortgage, and retirement savings. Typically 100k. There’s also ~15k for FICA: Social Security (small 65+ pension) and Medicare (65+ healthcare)[0]

Any other federal taxes to the individual are insignificant or investment related.

[0] https://smartasset.com/taxes/california-tax-calculator#pfVHM...


sibling comment answered your question, but I'll turn it around and ask, how is it elsewhere? Are retirement contributions compulsory?


Outside of the US? In developed economies, you usually have a mandatory retirement "tax" that goes into the public scheme and which pays a minimum amount when you are old enough (65 or 70 usually). It isn't much on its own, maybe enough to clear the poverty line or get close to it so you're also expected to invest for yourself through tax advantaged accounts. Better employers also offer a pension plan for which you pay some and they match it.


Details really depend on jurisdiction.

Eg Australia and Singapore have mandatory retirement funds. In eg Germany, the money you pay for the government retirement scheme, just gets paid out straight to current retirees, ie no savings are made at all.


> just gets paid out straight to current retirees

Well, considering most state pension schemes are also Ponzi schemes this isn't the case in only Germany. Norway might have an actually sustainable pension scheme?


Well, Australian 'superannutation' has private funds. Similar-ish to American 401k.

The Singaporean CPF system is interesting, but perhaps similar to the Norwegian system?


UK: it's basically compulsory to pay "national insurance" contributions if you're earning enough. That gives you a (fairly small) state pension: https://www.gov.uk/new-state-pension

On top of that it's strongly encouraged to make private pension contributions, from pre-tax income; I think this corresponds to the US "401k"?


UK private pensions are similar but much more generous in tax relief (for now) and in the amount you can put into them -even more so if you do salary sacrifice.

There is also a lot more tax advantaged savings for the better off i.e. 20k pa ISA basically put 20k a year beyond the reach of income and CGT is just the start.

VCT's EIS and SIS for some one on a SV engineers wage for example.

Tax on share options is far more sane as well.


About 18% of your income (including social security payments if you are unemployed) are compulsory and set of for your retirement, on top of that many employers may make a tax-deductible 4% payment into the employees private retirement fund.




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