Frequently Asked Questions
Your effective tax rate is the percentage of your total income paid in taxes. Your marginal rate is the tax percentage paid on the last, or next, unit of currency earned. Marginal rates are almost always higher than effective rates in progressive tax systems because lower income brackets are taxed at lower percentages.
The 30% facility allows employers to pay up to 30% of an expatriate employee's salary tax-free, significantly reducing the taxable base and increasing net take-home pay. This calculation applies a simplified version of the standard exemption to demonstrate the net income advantage.
Social security contributions fund national pensions, healthcare, and unemployment benefits. In countries like Germany and Belgium, these are separated from income tax and take a significant, but legally required, portion of your gross wage before income tax is even applied.
For Belgium, an average municipal tax is included to provide a realistic estimate. For the United States, only federal income tax and FICA are calculated; state and local taxes vary widely and are not included in the standard output. Always consult local tax authorities for precise localized tax obligations.
Self-employed individuals typically pay both the employer and employee portions of social security (like self-employment tax in the US) or face completely different deduction rules. In many countries, they must also calculate and pay their own healthcare premiums from their net earnings rather than having it deducted at payroll.