Hacker News Reader

Comment by scarface74 | Hacker News Reader

All of the difference between when I made $150K to around $225K came from RSUs. The ones I get the first half of the year are taxed at 40% (12.4% FICA, 2.4% Medicare, 22% Federal, 6% state). The second half don’t get taxed for FICA. That made the difference in our lifestyle.

Just for clarification, we pay the employer’s side of FICA on RSUs and I am soon moving to a state that doesn’t tax income.

But why is there a belief that you work harder to get paid more? It was a lot more work being a senior dev/de facto “cloud architect” at a 60 person company where everyone look to me for guidance (in the land of the blind, the one eyed man is king) than it is being a mid level consultant at a 1.6 trillion dollar company.

View on HN

I see a lot of people say they’re moving to a no-income tax state, but don’t you just make up the difference in fixed taxes like property tax? Maybe California and/or New York are specifically bad in ways I’m not aware of.

For what it’s worth, I live in a no-income tax state (Tennessee). I didn’t move here, I just grew up here. We have some of the lowest property taxes in the country for metropolitan areas: I pay around $2,500/yr in property taxes for my home within the city limits of Nashville.

The downside is that the city has very little income for infrastructure improvement/upkeep and education.

Property taxes are also below average in Florida. A booming tourist industry does wonders.

Does the federal government subsidize flood insurance in Florida too? Wonder if that rug will ever get pulled.

Yes. Federal flood insurance rates are set to rise to more reasonable levels over the next few years and people are already complaining

Definitely not always the case, but quite often you end up needing to take on more responsibility, at least within the same company. The states has different bits that I'm unaware of, but in Canada there's no such thing as not paying income tax, but there are places with lower income tax.

RSUs are withheld using that formula. They are taxed as ordinary income. It doesn’t matter on your taxes if you are earning dollars or RSUs.

My company does not pay the employer side of FICA (7.4%) on RSUs

Most of FICA is social security, which only applies to the first $142k or so of your income. If you hit that cap before RSUs, then it wouldn't apply to those. (There's still the medicare portion, but that's only 1.45% each side.)

This feels illegal but I’m certainly no lawyer. I’ve never heard of this sort of thing happening before for w2 employees. Learn something new every day.

I’m sure someone would have called out the US’s second largest employer if it were illegal.

Just to be clear - we have to pay the employer side.

Reply on news.ycombinator.com