Taxes on a Million Dollars of Earned Income

Taking a deep dive into first-world problems, we’ll see precisely how much one might pay in taxes on a million-dollar annual salary

It might be a little. It might be a lot. It depends greatly on how long it takes to accumulate those earnings.

In today’s post, we’ll calculate the taxation on households earning $100,000 a year, $250,000 a year, and $1,000,000 a year as W-2 employees in 2021, with taxes due in 2022.

Taxes on a Million Dollars of Earned Income

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We’ll keep things consistent by looking at married couples with one income, filing jointly while contributing $39,000 a year to tax-deferred retirement plans.

The tax calculation on $35,900 of taxable income gives them a federal income tax of $3,913, according to TaxCaster.

Earning $1 Million in Ten Years

Multiplying the income from our first example by 2.5x, this couple is earning $250,000 per year.

Earning $1 Million in Four Years

While not common in medicine, public records do show that a number of our states’ highest-paid employees are employed by our public universities.

Earning a Million Dollars a Year

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