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[tbp140]

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[UnfrozenCaveman]

There is a federal, state, and NYC tax. NYC and state tax are deductible against your federal tax. Your take home pay after benefits, taxes, and other payroll deductions will be around 8000 per month. How much you might actually owe per year depends on your situation but generally assume net take home pay after filing taxes around 110,000. (This of course assumes 160000 starting on Jan 1).

As far as percentages, they are just rules of thumb and the ones you mention are essentially maximums. If you want to spend a third of your pre-tax income (about 4400) on an apartment, you certainly could but seems silly to me to spend that much when you could save at least half that and have a decent apartment. Especially since you could save around 20000 per year in pre tax saving plans to reduce your taxable income.

[raptors_delight]

The answer to almost all of your questions is dependent on your individual circumstances. What you actually pay in tax depends on whether you're single or married (or married filing separately), whether you have kids, how much pre-tax income you're putting into retirement accounts and whether you can take any of hundreds of possible deductions. That's exactly why the government makes you file a tax return each year rather than saying, "Eh, we'll just skim 25% off the top of your $160,000 and call it a day"; what you pay in taxes depends on your individual circumstances and unfortunately can be complicated. My best guess—assuming you're single with no kids and taking no itemized deductions—is that your take-home pay will be around $95,000, including city taxes (which you have to pay if you live in the city). That doesn't include your bonus or any in-kind benefits that might constitute taxable income.

Generally, the percentage of your income you "should" spend on _x_ is based on take-home pay, not gross pay. The recommendation is usually closer to 25% for housing, but that's probably not realistic in NYC. How you allocate your expenses really should be determined by a well-planned budget. If you have a lot of student loan debt to tackle, your situation is going to be different than for someone who's debt-free. If you have kids and need to worry about childcare expenses, that's a huge chunk of your budget that has to be reallocated from some other expense—it can't come from the sky. $95,000 is not really that much money in NYC, so I'd recommend figuring out what other costs you have to deal with before you set a budget for housing and other fixed costs. That said, your budget for all of these things really depends a lot on your preferences. If you're willing to deal with a longer commute, you can drop your housing budget a little (but you might have to increase your transportation budget). If your apartment is cheaper and less modern, you might want to budget more for heating and cooling costs than if your apartment has great insulation and an efficient heating/cooling system (as a long-time northerner, trust me—heating costs in particular are a bitch in an old apartment). If you don't have other costs and want to spend 70% of your budget on a swanky apartment and fine dining, that's fine too; but that's a bad move if you have high debt and 10 kids. I get that you're trying to figure out a baseline for your expenses, but I think that's a really bad place to start because it has no relationship to what you're actually able to afford and what you value more or less in life. What you should spend on _x_ is what you're able to spend comfortably within the rest of your budget and what you want to spend on _x_. For example, my spouse and I will have a combined gross income of about $235,000, and there's no way we're spending more than $2800 on housing, even though 35% of our (badly estimated) after-tax income would be closer to $4200. Why? We're used to living in a gross shithole and have a lot of other things we need to allocate our limited budget to. (i.e., my massive student loan debt).

Hope that helps.

[mvp99]

you can save around 4k net if you live NJ and avoid NYC income tax. sales tax is also lower in NJ. It's better to buy a property in NY if you somehow have the money since property taxes for owners in NY are very low compared to other cities and NJ.

[Tls2016]

you can save around 4k net if you live NJ and avoid NYC income tax. sales tax is also lower in NJ. It's better to buy a property in NY if you somehow have the money since property taxes for owners in NY are very low compared to other cities and NJ.

I have lived in NY all my life and this is the first time anyone has said property taxes are low here.
I thought take home was closer to $96,000, but it's been a while.

[mvp99]

you can save around 4k net if you live NJ and avoid NYC income tax. sales tax is also lower in NJ. It's better to buy a property in NY if you somehow have the money since property taxes for owners in NY are very low compared to other cities and NJ.

I have lived in NY all my life and this is the first time anyone has said property taxes are low here.
I thought take home was closer to $96,000, but it's been a while.

Im no expert so feel free to verify but NY is apparently great for owners. If its an owner occupied home prop tax is low.. "Not all property taxes are high here: New York actually has very low taxes on owner-occupied homes. Our property tax system is a perverse cross-subsidy from relatively poor renters to relatively rich homeowners." http://www.businessinsider.com/if-you-l ... out-2013-6

[Tls2016]

I think they are saying it's less if you live in a property instead of owning a rental building. That publication isn't reliable anyway, but I'm not researching it. I'm sure anyone who wants to buy a place in NY will look into it.
Just for comparison, upstate has high taxes as well in part because of something called the school tax. Upstate school districts independently vote for school taxes. Then the state property taxes are high.
I've just never heard anyone suggest buying here because the taxes are low.

[whysoseriousbiglaw]

Last I checked I think it's around $97k after all the federal, state and city taxes are taken out. In other words, shit money for the hours you work.

[Anonymous User]

I'm straight through from undergrad and have never taken any tax or economic-related classes. I've had some part-time jobs during the school year and summers but I've never prepared my own taxes because my parents have always just done it for me. Yes, very privileged, I know. Sorry.

Can someone help me understand how much money I'll actually be making when I earn $160k/year in New York? (Assuming that I live in Manhattan.) Is there a NYC tax, a NY state tax, AND federal income tax? Basically, does anyone know how much I'll make per year after all the taxes are taken out?

Following up on that, from what I've researched online, it's advisable to spend 35% on housing-related costs, 5% on utilities, 10% on savings, 15-20% on transportation. Am I supposed to calculate those expenses based on after tax income, or before tax?

Thanks everyone for your help.

When I made 163K in NYC biglaw a few couple of years ago (160K + 10k pro-rated bonus), I brought home 93K. That could have been higher, but I put 10K pre-tax into my 401K plan. I also got about 3K more back in my tax return. Depending on how much you plan to save, upper 90s is a good place to expect to be post-tax.

Your transportation costs are too high. Honestly, your only transportation cost should be $116.5/mo for a metrocard since you're living in Manhattan. Cabs are a rip off and a waste of cash unless the firm is reimbursing you for it. Your utilities are also high. I averaged $80-100/mo for my electric costs. That works out to $960-1,200/yr or 1.29% post-tax at the high end of that range.

If you are to do 35% on housing, it's definitely post-tax. 35% of 160K is $56,000/yr or $4,666/mo. Landlords require a guarantor unless you make 40x/monthly rent. 40x for that payment would be $186,666, which you don't make. Regardless, $4,600 would be insane given that my post-tax income hovered around $7,500/mo while paying social security tax, and $8,000/mo after I capped out. For the sake of an example, I paid 32% post-tax income ($30,000/yr, or $2,500/mo), which was much more doable.

[2014]

Seems pretty unreasonable to tell the guy "hey cabs are a ripoff, go ahead and budget $0 for them" but 15-20% is still way too high, agreed there.

I would bake cable(or Hulu/Netflix/etc if you go that route) and internet into utilities also which gets it closer to 5% but that estimate is still also high.

[Tls2016]

Seems pretty unreasonable to tell the guy "hey cabs are a ripoff, go ahead and budget $0 for them" but 15-20% is still way too high, agreed there.

I would bake cable(or Hulu/Netflix/etc if you go that route) and internet into utilities also which gets it closer to 5% but that estimate is still also high.

Agreed. People have to take cabs sometimes and they are a ripoff. Spent $70 for 4 short trips in one day last week because of being temporarily on crutches and couldn't deal with public transportation or walk. Usually I would have walked or taken the train.

Budgeting 0 is not smart but your expenses won't be close to that of a car payment, gas, insurance, etc. I would plan on a minimal amount for getting home late at night when you go out if you aren't close to home.

[Anonymous User]

Seems pretty unreasonable to tell the guy "hey cabs are a ripoff, go ahead and budget $0 for them" but 15-20% is still way too high, agreed there.

I would bake cable(or Hulu/Netflix/etc if you go that route) and internet into utilities also which gets it closer to 5% but that estimate is still also high.

Agreed. People have to take cabs sometimes and they are a ripoff. Spent $70 for 4 short trips in one day last week because of being temporarily on crutches and couldn't deal with public transportation or walk. Usually I would have walked or taken the train.

Budgeting 0 is not smart but your expenses won't be close to that of a car payment, gas, insurance, etc. I would plan on a minimal amount for getting home late at night when you go out if you aren't close to home.

Our disagreement may stem from what we think needs to be "budgeted." I've lived and work in NYC for almost three years now, and my cab costs have been negligible. I'm not saying a cab every once in a while is a bad idea, but there's no need to take so many cabs that someone making 160K+ needs to "budget" for them. If you're taking them regularly enough for them to affect your overall finances, you aren't using the public transportation system properly.

[Anonymous User]

Seems pretty unreasonable to tell the guy "hey cabs are a ripoff, go ahead and budget $0 for them" but 15-20% is still way too high, agreed there.

I would bake cable(or Hulu/Netflix/etc if you go that route) and internet into utilities also which gets it closer to 5% but that estimate is still also high.

I grew up in NYC and have lived here now for 7 months. I literally have not once taken a cab (or uber/lyft) unless the firm is reimbursing. They are a huge waste of $ and unless it is really early or really late they typically aren't any faster than the subway.

[Tls2016]

Seems pretty unreasonable to tell the guy "hey cabs are a ripoff, go ahead and budget $0 for them" but 15-20% is still way too high, agreed there.

I would bake cable(or Hulu/Netflix/etc if you go that route) and internet into utilities also which gets it closer to 5% but that estimate is still also high.

Agreed. People have to take cabs sometimes and they are a ripoff. Spent $70 for 4 short trips in one day last week because of being temporarily on crutches and couldn't deal with public transportation or walk. Usually I would have walked or taken the train.

Budgeting 0 is not smart but your expenses won't be close to that of a car payment, gas, insurance, etc. I would plan on a minimal amount for getting home late at night when you go out if you aren't close to home.

Our disagreement may stem from what we think needs to be "budgeted." I've lived and work in NYC for almost three years now, and my cab costs have been negligible. I'm not saying a cab every once in a while is a bad idea, but there's no need to take so many cabs that someone making 160K+ needs to "budget" for them. If you're taking them regularly enough for them to affect your overall finances, you aren't using the public transportation system properly.

Maybe we budget differently. I plan and track every expense by category. I see OP is just looking for general percentages so I agree he can just go with 0. My example was to show cabs eat up money quickly.

[RaceJudicata]

re: Cabs

Do ya'll ever go out at night? If you dont take a cab home (or uber), you arent living.

[GreenEggs]

re: Cabs

Do ya'll ever go out at night? If you dont take a cab home (or uber), you arent living.

I prefer to just take the subway, but also a student so there's that

[Anonymous User]

Seems pretty unreasonable to tell the guy "hey cabs are a ripoff, go ahead and budget $0 for them" but 15-20% is still way too high, agreed there.

I would bake cable(or Hulu/Netflix/etc if you go that route) and internet into utilities also which gets it closer to 5% but that estimate is still also high.

I grew up in NYC and have lived here now for 7 months. I literally have not once taken a cab (or uber/lyft) unless the firm is reimbursing. They are a huge waste of $ and unless it is really early or really late they typically aren't any faster than the subway.

One thing you will learn in biglaw is that time is a necessity and that money can be converted into time. If you are billing 250 hours in a month and trying to maintain a semblance of a life, then cabs become less of a luxury and more of a necessity, since if they can save you 15 minutes that's the difference between a pissed off SO (or a pissed off senior associate/partner when you are turning in rushed work to meet said SO) and a rare nice evening out.

There is some truth to the idea that your expenses go up as your income increases because you pay to have things done for you that you would normally do yourself - not because you become some fancy pants moneybags but because the extra expense is worth the time saved.

[Anonymous User]

Also at some point (usually Y3 or Y4) you will become eligible for AMT and lose the state/local income deduction as well as a host of other deductions. I'm a biglaw midlevel and actually owed the feds money this year.

[abitaman6363]

Move to Texas. 20% lower billable hours. $160k plus no state income tax. Currently renting 2500 sq ft home (#BR, 2.5 baths, backyard, 2 car garage) and share with one friend. I pay $950 in rent (includes utilities) and live 10 mins from my office building downtown.

Obviously tongue-in-cheek. NYC has a lot to offer. But for those who are not truly connected to NYC and whose long-term goals do not require NYC connections, I am always a bit confused as to why secondary markets are not more of an option.

[tbp140]

Thanks for the insight everyone. This is super helpful information.

[anon919]

Move to Texas. 20% lower billable hours. $160k plus no state income tax. Currently renting 2500 sq ft home (#BR, 2.5 baths, backyard, 2 car garage) and share with one friend. I pay $950 in rent (includes utilities) and live 10 mins from my office building downtown.

Obviously tongue-in-cheek. NYC has a lot to offer. But for those who are not truly connected to NYC and whose long-term goals do not require NYC connections, I am always a bit confused as to why secondary markets are not more of an option.

*Drools*

[mvp99]

Move to Texas. 20% lower billable hours. $160k plus no state income tax. Currently renting 2500 sq ft home (#BR, 2.5 baths, backyard, 2 car garage) and share with one friend. I pay $950 in rent (includes utilities) and live 10 mins from my office building downtown.

Obviously tongue-in-cheek. NYC has a lot to offer. But for those who are not truly connected to NYC and whose long-term goals do not require NYC connections, I am always a bit confused as to why secondary markets are not more of an option.

*Drools*

20% lower billable..come oooooonn.. nice rental though...

[favabeansoup]

Move to Texas. 20% lower billable hours. $160k plus no state income tax. Currently renting 2500 sq ft home (#BR, 2.5 baths, backyard, 2 car garage) and share with one friend. I pay $950 in rent (includes utilities) and live 10 mins from my office building downtown.

Obviously tongue-in-cheek. NYC has a lot to offer. But for those who are not truly connected to NYC and whose long-term goals do not require NYC connections, I am always a bit confused as to why secondary markets are not more of an option.

I work in Texas and I am totally with you, but I can also easily understand why people choose NYC over other markets. Problem with secondary markets in general is the lower availability of SA spots vs huge availability in NYC, and the often emphasis on ties to city/state. Plus, some people don't mind coming home with less take home as they enjoy the big-city, NYC life. Regardless of lower billables and more money, The Texas life is not for everyone.

[abitaman6363]

Move to Texas. 20% lower billable hours. $160k plus no state income tax. Currently renting 2500 sq ft home (#BR, 2.5 baths, backyard, 2 car garage) and share with one friend. I pay $950 in rent (includes utilities) and live 10 mins from my office building downtown.

Obviously tongue-in-cheek. NYC has a lot to offer. But for those who are not truly connected to NYC and whose long-term goals do not require NYC connections, I am always a bit confused as to why secondary markets are not more of an option.

I work in Texas and I am totally with you, but I can also easily understand why people choose NYC over other markets. Problem with secondary markets in general is the lower availability of SA spots vs huge availability in NYC, and the often emphasis on ties to city/state. Plus, some people don't mind coming home with less take home as they enjoy the big-city, NYC life. Regardless of lower billables and more money, The Texas life is not for everyone.

Of course! I had the opportunity to go to school close to NYC and frequented the city weekly. Of course, the lifestyle fits some people, and does not for others. My main point was that people should at least make the calculations in there head in terms of what is truly important for them. I personally have a lot of friends who headed to NYC post-law school whose main goals were financial stability, great QOL (i.e., decent amount of time outside of work) and decent long-term job prospects in the legal field. Many of these people were not from the NE area, but still headed on to NYC. Several have expressed disappointment in their decisions and could have reached certain goals (financial and otherwise) much quicker had they scouted secondary markets with lower costs of living.

I don't want to minimize the great pro's that NYC offers! You may be in a small apartment, but Brooklyn/Manhattan are your living rooms. There are a cluster of legal/non-legal job opportunities there. The list goes on! But I also hope people do not underestimate other legal markets due the prestige or certain mistaken perceptions of NYC.

[Rahviveh]

Move to Texas. 20% lower billable hours. $160k plus no state income tax. Currently renting 2500 sq ft home (#BR, 2.5 baths, backyard, 2 car garage) and share with one friend. I pay $950 in rent (includes utilities) and live 10 mins from my office building downtown.

Obviously tongue-in-cheek. NYC has a lot to offer. But for those who are not truly connected to NYC and whose long-term goals do not require NYC connections, I am always a bit confused as to why secondary markets are not more of an option.

I work in Texas and I am totally with you, but I can also easily understand why people choose NYC over other markets. Problem with secondary markets in general is the lower availability of SA spots vs huge availability in NYC, and the often emphasis on ties to city/state. Plus, some people don't mind coming home with less take home as they enjoy the big-city, NYC life. Regardless of lower billables and more money, The Texas life is not for everyone.

Of course! I had the opportunity to go to school close to NYC and frequented the city weekly. Of course, the lifestyle fits some people, and does not for others. My main point was that people should at least make the calculations in there head in terms of what is truly important for them. I personally have a lot of friends who headed to NYC post-law school whose main goals were financial stability, great QOL (i.e., decent amount of time outside of work) and decent long-term job prospects in the legal field. Many of these people were not from the NE area, but still headed on to NYC. Several have expressed disappointment in their decisions and could have reached certain goals (financial and otherwise) much quicker had they scouted secondary markets with lower costs of living.

I don't want to minimize the great pro's that NYC offers! You may be in a small apartment, but Brooklyn/Manhattan are your living rooms. There are a cluster of legal/non-legal job opportunities there. The list goes on! But I also hope people do not underestimate other legal markets due the prestige or certain mistaken perceptions of NYC.

Some people don't want to live in a cultural wasteland