Take-home pay in Ontario is greater than California?

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Jul 16th, 2015 8:41 am

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Jul 14th, 2015 11:16 am

fred2028 [OP]: Sr. Member; Feb 27, 2008; 586 posts; 24 upvotes

Jul 14th, 2015 11:16 am

Take-home pay in Ontario is greater than California?

Hi, I'm trying to calculate take-home pay in both Ontario and California using online calculators. The annual gross example I'm using is $115k.

For Ontario, I've tried

http://www.walterharder.ca/index.php/ca ... alculator/ which gives a net income of $78,724.29
http://www.knowledgebureau.com/index.ph ... -estimator which gives total deductions at $32,424.11 so net income of $82,575.89

For California I've tried various calculators, the most in-depth seems to be http://www.tax-rates.org/income-tax-calculator/. This gives a take home pay of $75,835.63, which is roughly in line with the other calculators I used.

I thought the total deductions in the US are, in general, noticeably lower than that of Canada?

Cheers,
Fred Liu

29 replies

Jul 14th, 2015 11:42 am

flafson: Deal Addict; Oct 29, 2010; 4456 posts; 811 upvotes

Jul 14th, 2015 11:42 am

Why looking at one of the highest taxed states in the US though? Also, why looking at such a high income level? Go for something like average or above average income.

Jul 14th, 2015 11:50 am

fred2028 [OP]: Sr. Member; Feb 27, 2008; 586 posts; 24 upvotes

Jul 14th, 2015 11:50 am

flafson wrote: ↑Why looking at one of the highest taxed states in the US though? Also, why looking at such a high income level? Go for something like average or above average income.

Because I am moving there for a job and am using a salary close to my actual salary.

Cheers,
Fred Liu

Jul 14th, 2015 12:04 pm

redgrandam: Deal Fanatic; Mar 12, 2010; 6107 posts; 656 upvotes; SW Ontario

Jul 14th, 2015 12:04 pm

What's the question then. The accuracy of the calculators?

They seem correct I think. California is a highly taxed state.

Jul 14th, 2015 12:04 pm

LandKing: Banned; Nov 1, 2014; 4317 posts; 561 upvotes; Toronto, ON

Jul 14th, 2015 12:04 pm

flafson wrote: ↑Why looking at one of the highest taxed states in the US though? Also, why looking at such a high income level? Go for something like average or above average income.

Because California is one of the less than a handful of states suitable for living in

Taxes are quite high in those habitable states due to costs of running a habitable state

Jul 14th, 2015 12:05 pm

porchemasi: Deal Addict; Aug 28, 2010; 1290 posts; 351 upvotes; Toronto

Jul 14th, 2015 12:05 pm

USD to CAD? or you talking CAD only?

Jul 14th, 2015 12:12 pm

fred2028 [OP]: Sr. Member; Feb 27, 2008; 586 posts; 24 upvotes

Jul 14th, 2015 12:12 pm

LandKing wrote: ↑Because California is one of the less than a handful of states suitable for living in

Taxes are quite high in those habitable states due to costs of running a habitable state

Ah did not know that. I guess my naivety to our Southern neighbour had me assuming I'll always get taxed less in the States than Canada.

porchemasi wrote: ↑USD to CAD? or you talking CAD only?

For the US I used USD and for Canada I used CAD. I was just comparing the actual gross pay amount, no forex conversion

redgrandam wrote: ↑What's the question then. The accuracy of the calculators?

They seem correct I think. California is a highly taxed state.

Yeah, I just wanted to verify the accuracy of the calculators.

Cheers,
Fred Liu

Jul 14th, 2015 12:16 pm

redgrandam: Deal Fanatic; Mar 12, 2010; 6107 posts; 656 upvotes; SW Ontario

Jul 14th, 2015 12:16 pm

Looks like sales tax is a bit lower too than in Ontario at least.

Jul 14th, 2015 12:38 pm

fred2028 [OP]: Sr. Member; Feb 27, 2008; 586 posts; 24 upvotes

Jul 14th, 2015 12:38 pm

I guess how come Washington state has no state income tax? From what I've heard places like Seattle have a pretty high standard of living ... Or does the weather make it highly unattractive?

Cheers,
Fred Liu

Jul 14th, 2015 12:47 pm

brother_bruce: Member; May 6, 2009; 262 posts; 64 upvotes

Jul 14th, 2015 12:47 pm

If you're considering moving there for a job, you'll have to look at more than just after-tax income... make sure to take the cost of living into account as well.

For example, 115k salary would go a lot farther in most places in Canada than San Francisco and surrounding areas, for example.

Do you mind sharing what city you live in vs what city you're looking to move to? That would also help with your analysis.

Jul 14th, 2015 12:51 pm

fred2028 [OP]: Sr. Member; Feb 27, 2008; 586 posts; 24 upvotes

Jul 14th, 2015 12:51 pm

brother_bruce wrote: ↑If you're considering moving there for a job, you'll have to look at more than just after-tax income... make sure to take the cost of living into account as well.

For example, 115k salary would go a lot farther in most places in Canada than San Francisco and surrounding areas, for example.

Do you mind sharing what city you live in vs what city you're looking to move to? That would also help with your analysis.

There is a drastic difference in total compensation for me between the Bay area and Ontario, definitely enough to cover CoL adjustments. I was just curious that the total deductions in Cali seemed higher than in Ontario and wanted to confirm that was true. Sadly it seems so ...

Cheers,
Fred Liu

Jul 14th, 2015 1:11 pm

brother_bruce: Member; May 6, 2009; 262 posts; 64 upvotes

Jul 14th, 2015 1:11 pm

Good to see you've already taken that into account.

Another key thing to look into is health insurance... US will bleed you dry for health care costs.

Jul 14th, 2015 1:13 pm

fred2028 [OP]: Sr. Member; Feb 27, 2008; 586 posts; 24 upvotes

Jul 14th, 2015 1:13 pm

brother_bruce wrote: ↑Good to see you've already taken that into account.

Another key thing to look into is health insurance... US will bleed you dry for health care costs.

I have health insurance included with work

Cheers,
Fred Liu

Jul 14th, 2015 1:18 pm

ObsidianTriangle: Newbie; Apr 30, 2013; 85 posts; 9 upvotes

Jul 14th, 2015 1:18 pm

So a few things to point out. First, the amount of income tax between Ontario and Cali is very similar. Whether one is higher or lower depends on your exact income level, they are different tax systems with different brackets and rules. From what I recall having done this calculation in the past, they flip flop back and forth as your income changes.

As for Seattle (or Washington in general), you're generally much better off working there from a purely financial point of view and if you're looking at a snapshot in time. As for the cons, the weather is a huge one. The other obvious one is that there is just way more competition (i.e. a lot more tech companies) in a Bay area, so in theory, you have a lot more opportunities and higher rate of growth; in practice, it really depends on the person.

An a final word on terminology. A deduction is something you subtract from your gross income so you pay 'less' taxes. You seem to be using the term to describe the amount of tax that is paid which is quite confusing.

Jul 14th, 2015 1:21 pm

fred2028 [OP]: Sr. Member; Feb 27, 2008; 586 posts; 24 upvotes

Jul 14th, 2015 1:21 pm

ObsidianTriangle wrote: ↑So a few things to point out. First, the amount of income tax between Ontario and Cali is very similar. Whether one is higher or lower depends on your exact income level, they are different tax systems with different brackets and rules. From what I recall having done this calculation in the past, they flip flop back and forth as your income changes.

As for Seattle (or Washington in general), you're generally much better off working there from a purely financial point of view and if you're looking at a snapshot in time. As for the cons, the weather is a huge one. The other obvious one is that there is just way more competition (i.e. a lot more tech companies) in a Bay area, so in theory, you have a lot more opportunities and higher rate of growth; in practice, it really depends on the person.
e
An a final word on terminology. A deduction is something you subtract from your gross income so you pay 'less' taxes. You seem to be using the term to describe the amount of tax that is paid which is quite confusing.

Hi, thanks for the analysis. It's really helpful for me to read your comparison between Washington state and Cali and I didn't know Cali and Ontario had very similar tax levels.

And yes, I think I misused "deductions". What I meant was total money taken off my gross by the government, including federal/state income taxes and FICA and stuff like that. Do people typically lump all this together as just "tax"?

Cheers,
Fred Liu

Jul 14th, 2015 1:26 pm

greenmoon: Sr. Member; Apr 5, 2009; 948 posts; 333 upvotes; Toronto

Jul 14th, 2015 1:26 pm

fred2028 wrote: ↑For the US I used USD and for Canada I used CAD. I was just comparing the actual gross pay amount, no forex conversion

That makes for a slightly skewed comparison. Both USA and Canada have progressive tax systems, so it's expected that the average tax rate on 115K USD will be higher than on 115K CAD, even all other things being equal. How would the average tax rate change if you increased the CAD salary by 27%? (currently 1.27 CAD ~= 1 USD)

Jul 14th, 2015 1:28 pm

fred2028 [OP]: Sr. Member; Feb 27, 2008; 586 posts; 24 upvotes

Jul 14th, 2015 1:28 pm

greenmoon wrote: ↑That makes for a slightly skewed comparison. Both USA and Canada have progressive tax systems, so it's expected that the average tax rate on 115K USD will be higher than on 115K CAD, even all other things being equal. How would the average tax rate change if you increased the CAD salary by 27%? (currently 1.27 CAD ~= 1 USD)

If I enter $115,000 times 1.27 in to Ontario I get a take home pay of $96,002.21, which is ~35% tax so roughly the same as Ontario I guess.

Cheers,
Fred Liu

Jul 15th, 2015 2:52 am

ObsidianTriangle: Newbie; Apr 30, 2013; 85 posts; 9 upvotes

Jul 15th, 2015 2:52 am

fred2028 wrote: ↑Hi, thanks for the analysis. It's really helpful for me to read your comparison between Washington state and Cali and I didn't know Cali and Ontario had very similar tax levels.

And yes, I think I misused "deductions". What I meant was total money taken off my gross by the government, including federal/state income taxes and FICA and stuff like that. Do people typically lump all this together as just "tax"?

It'll vary from person to person. My personal take on it as far as income taxes go is that anything that I'm legally forced to pay is a tax, regardless of what they want to call it. So if you're going to be working in California, here are some of the items to include off the top of my head:
Federal income tax
State income tax
Social security
Medicare
SDI
AMT (though you probably don't have to worry about this for awhile)
Capital gains and interest income

Jul 15th, 2015 4:46 am

Syne: Deal Guru; Dec 7, 2009; 13886 posts; 1362 upvotes

Jul 15th, 2015 4:46 am

LandKing wrote: ↑Because California is one of the less than a handful of states suitable for living in

Taxes are quite high in those habitable states due to costs of running a habitable state

This. You're not living in a backwater with crumbling infrastructure. That comes at a price.

In a perfect system, corporations would fear the government and the government would fear the people. - David Wong

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Jul 15th, 2015 6:03 am

spike1128: Deal Guru; Oct 7, 2010; 14976 posts; 5425 upvotes

Jul 15th, 2015 6:03 am

greenmoon wrote: ↑That makes for a slightly skewed comparison. Both USA and Canada have progressive tax systems, so it's expected that the average tax rate on 115K USD will be higher than on 115K CAD, even all other things being equal. How would the average tax rate change if you increased the CAD salary by 27%? (currently 1.27 CAD ~= 1 USD)

The OP need to compare the FOREX and conversion. He need to do a direct comparison of the after tax amount USD vs USD or CAD va CAD.

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