How Taxes Can Ruin Your Big Raise

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As January comes to a close and we grow accustomed to the new year, we focus our eyes on the great challenges to come: being single on Valentine’s Day, happy hour power hour for St. Patrick’s Day, and even straight tequila night for Cinco de Mayo. However, the most terrifying challenge we each face in the first quarter of a new year is our annual evaluations. For those of you who have been fortunate enough to enter the workforce within the past year, the annual evaluation is where your superiors sit you down and grill you on your performance over the past year and let you know whether you should start handing out your resumé, thank baby Jesus that you are lucky enough to still be employed there at your current pay rate, or you’re actually a rockstar in disguise and deserve a raise. For the lucky few of us, our annual evaluations will end in a raise and/or a promotion. For the luckier few of us, the raise will dwarf the normal cost of living raise and bump us into a higher tax bracket.

There is nothing more elating than a huge raise. No longer will you have to face the cruel and unusual punishment of $7 per day food budgets and the tyranny of $15 Jim Harbaugh-approved Walmart khakis. The world is your oyster…until reality kicks you in your kidneys and it’s W-4 time. That’s right, now that you’ve gotten a raise you have to educate the company on how much to withhold from your seemingly highly inflated paycheck, and boy does this graded tax-bracket system blow monkey balls. Your raise may have looked something like $5,000 to $10,000 or even more on paper, but after running the numbers including your newly inflated tax rate, FICA, and any state income tax you may have, you might be taking home just over half that on top of your previous take home when all is said and done. What the actual fuck? All the elation is gone and you realize that at best you are taking home a few hundred extra bucks per month. Nothing like a raise to make you an avid proponent of tax reform.

All the dreams are gone. The new car, the bottomless bar tabs, upgrading to Uber from uberX, the autographed DVD set of Diff’rent Strokes…all reduced to a few extra trips to Chipotle per month. #thanksobama. Angry tax gods, what have we done to deserve such punishment?

On top of it all, since you received this generous, enormous raise, the company expects much, much more from you. Completely understandable, and look at you – you go getter, you – going above and beyond is what got you the raise in the first place. Your responsibilities have doubled while your actual take home has only marginally increased, and the only silver lining is that you finally have a tiny rainy day fund in case your water heater explodes while you slave away at work 9-10 hours per day.

The entire experience really gives you insight into the life of that lower level manager who creates an anonymous Twitter account and spews pseudo-political flames at the “fair share” rhetoric we’ve grown so fond of over the past 5 years. Can you call him a kook anymore? Getting a huge raise before turning 30 is supposed to be one of your greatest postgrad experiences, and thanks to the big IRS reality check, you’re celebrating it with an extra Chipotle a month and an upgrade from Bud Light to microbrew.

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5OClockShadow

"Technically, Pablo Escobar was in sales."

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