Should I stay or should I go?
Getting a job offer is exciting. But before you accept the position, you may want to consider how it may affect your financial picture. The three, easy steps in this simple calculator may help make your decision a little easier.
|Adjusted Unvested Income (adjusted for taxes and cost of living)||#detailNewUnvestedIncome|
|Total Adjusted Benefits||#detailOtherBenefitsTaxAdj|
|Unreimbursed Moving Costs||#detailOtherCosts|
|Other Costs Adjusted for Taxes||#detailOtherCostsTaxAdj|
|Total Up-Front Costs||#detailTotalUpfrontCostsTaxAdj|
|Current Job Annual Compensation|
|Total Pre-Tax Income||#detailCurrentPreTaxIncome|
|Total After-Tax Income||#detailCurrentAfterTaxIncome|
|Adjusted Total After-Tax Income
(as if in current location & employment status)
|New Job Annual Compensation|
|Total Pre-Tax Income||#detailNewPreTaxIncome|
|Total After-Tax Income||#detailNewAfterTaxIncome|
|Adjusted Total After-Tax Income
(as if in current location & employment status)
The “Job Offer Evaluator” calculator allows for multiple forms of compensation generally provided by employers, as well as external factors,in an effort to provide users with a single comparable measure. The forms of compensation included are as follows:
- Base salary
- Other income—including equity compensation or deferred compensation
- Employer retirement contributions through match
- Profit sharing contributions
- Other benefits—including tuition reimbursements
- Unvested Income/Benefits
- Unvested income—including bonuses that have not been paid
- Unvested retirement benefits
- Any additional costs incurred from leaving a job
External factors that are considered are as follows:
- Estimated state taxes
- Estimated federal taxes
- Estimated FICA taxes (Social Security and Medicare)
- Cost of Living
- Changes in cost of living based on basket of goods defined by Cost of Living Index
The calculator evaluates, based on the information the user provides, each part of the compensation package and adjusts it for external factors. The result is a measure of after-tax purchasing power, or lifestyle, which is compared between the current job and the potential new job.
Details of calculations:
All income sections are aggregated for calculations of taxes. Salary, bonus, and other income are assumed to be taxable in the current year. State taxes are then calculated on this income using an effective tax rate calculated for each state. FICA taxes are then applied using 6.2% for Social Security (12.4% if self-employed) and 1.45% for Medicare (2.9% if self-employed). Social Security will not be taxed for any income above the federal Limit. Finally, we calculate an effective federal tax rate and apply it to the total income. All limits and tax information is for the 2020 tax year. For simplicity of calculations we do not include many other aspects of the individual tax code. Including, but not limited to: Medicare surcharges, your specific individual deductions, exclusion phase-outs, or AMT.
Federal tax effective rates are calculated using IRS data based on income groups. Data on income, deductions, and exemptions is obtained for each income group, and an average effective rate is calculated by applying single filer tax brackets. The result is a list of effective federal tax rates at each income level.
In calculating your effective tax rate, Fidelity starts with your stated household gross income and finds the average level of deductions for similar filers with similar incomes using IRS statistics. Since these statistics are backwards-looking, data on deductions under the new tax regime are not yet available. So while the tax calculations have been updated using the latest IRS income tax tables, the assumed deductions still reflect statistics from the previous tax regime.
State tax effective rates are calculated in a similar manner. However, only two income groups are used. The groups include those with earnings of $50,000 to $125,000 for one group and $150,000 to $350,000 for the higher-income group. Because availability state data is limited and deductions are applied on a state-by-state basis, the analysis assumes state-specific standard deductions and exemptions for a single filer. Filers with a personal situation that differs from our assumptions may experience different tax results than we have estimated. The latest data available for state tax brackets, exclusions, and standard deductions was used at the time of the development of this calculator which was for calendar year 2020.
Local taxes are not included in the analysis; consult a tax advisor to get a sense of how local taxes can affect your situation.
We are able to obtain the after-tax income for both the current and new job after applying the tax rates and limits listed above.
Tax laws are extremely complex and subject to continuous change. Our calculation has limited capability to model your tax liability, and future tax laws may be significantly different from current tax laws. The software used to generate your results will be updated periodically to reflect changes in tax rules. While reasonable efforts are made to use and maintain the most current actual rates, income tax brackets, and other tax rules for estimating taxes, there may be a time lag between when new actual tax rates, brackets, and other rules become effective and when the software is updated to reflect them. Therefore your results may not reflect recent tax rule changes, and such changes could materially have an impact on the results provided. Your Plan is provided for educational and informational purposes only. Consult your tax advisor to ensure that your tax planning reflects current tax laws.
Our calculations do not calculate actual tax liabilities. Any tax calculations provided are for general information only and do not constitute legal or tax advice.
Cost of living
The calculator uses Cost of Living Index data on cost of living in the latest survey available which is for the 2020 calendar year. The survey provides an index value that is compared between two locations when relocation inputs are provided by the user. Using these values, we calculate how much more, or less, expensive the new location is compared with the current location. If the user does not require relocation then there is no affect from cost of living.
The calculator assumes that the location provided is not only the residence of the user for cost-of-living but also the state in which the user will be taxed. For users that live in a different state than they work the calculator may under or overestimate the state tax effect.
For the new location only, we take the output of the after-tax income calculation and express it as a cost-of-living–adjusted value. This provides us with a lifestyle measure in which both incomes are expressed in equal terms. This can be thought of as the purchasing power of each income, thus making them directly comparable.
The value of benefits is calculated using the user inputs for Retirement Plan Match, Match Rate, Profit Sharing, and other benefits. Salary and bonus income is considered to be eligible for benefits; however, other income is assumed to be in a form similar to equity compensation that is not eligible for benefits. The benefits are not adjusted for taxes because assets are not taxed until they are removed from employer retirement accounts. The calculator accommodates the annual 402(g) limit, the 415 limit, and the maximum eligible income limit. No income over the maximum eligible income for the current year is considered in the value of benefits; thus, very highly compensated users will notice that an increase in compensation may not increase their benefits. Similarly, the 415 limit is applied using the profit sharing and two times the match amount representing the employee contribution and the employer contribution. If this calculation yields a result greater than the limit, then the value of the match is reduced until the 415 limit is reached. For companies that have very generous match programs, the match value may be reduced if the match, multiplied by eligible compensation, exceeds the 402(g) limit. It is important to note that the user’s personal situation is not taken into account when applying IRS limits. Limitations of the analysis include but are not limited to the timing of contributions, aggregation of contributions across similar plans, eligibility of plan participation or match eligibility. Additionally, users with multiple plans, or plans that are not subject to the listed limits, or plans that match catch-up contributions, may not experience an accurate estimation of benefits and limits.
The calculator assumes that you will be contributing a sufficient amount to the company retirement plan to receive the full maximum amount of company match, at the rates you have provided.
Benefits are not adjusted for taxes or cost of living. We do not know where the user will live when eventually spending his or her retirement savings, and thus we cannot adjust benefits for cost of living.
We simply add the value of the benefits to the after-tax income amount for the current job and to the after-tax, cost-of-living–adjusted income for the new job. We compare both values to calculate the percentage change in lifestyle.
Healthcare benefits are not specifically considered in the benefits section of this calculator, but they can be an important consideration. If you wish to take these into account, you will need to determine the dollar value and enter it into the “Other Net Benefits” field.
Unvested Income and Benefits
The total unvested benefit measure is meant to provide the user with a sense of additional income he or she would need to “break even” when leaving his or her current position. It can be thought of as a one-time bonus the user must receive to offset all lost value from unvested income and benefits.
Unvested income is adjusted for the difference in tax between the current location and the new location, as well as cost of living. Meanwhile, unvested retirement benefits remain unadjusted, because taxes are not applied to benefits, and the assets would not be spent until retirement. Other benefits and costs are adjusted for taxes. The values a user may have to pay back to his or her current firm must be repaid in after-tax money. For example: If a user owes $5,000 to the previous employer to repay tuition reimbursement, then he or she would need to receive a larger amount from the new employer to cover the $5,000 cost, as well as the taxes that would have to be paid on the income received.
Once these adjustments are made, the values are summed up to provide the measure of potential loss from unvested income and benefits.
When evaluating your retirement plan benefits be sure to consider other factors such as fees and investment options.
The calculator is for illustrative purposes only.
This Website is not intended for individuals under the age of 18.
Fidelity does not provide legal or tax advice. The information herein is general and educational in nature and should not be considered legal or tax advice. Tax laws and regulations are complex and subject to change, which can materially impact investment results. Fidelity cannot guarantee that the information herein is accurate, complete, or timely. Fidelity makes no warranties with regard to such information or results obtained by its use, and disclaims any liability arising out of your use of, or any tax position taken in reliance on, such information. Consult an attorney or tax professional regarding your specific situation.
Investing involves risk, including the risk of loss.
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