My 2024 effective tax rate shows how surprisingly low US taxes actually are

Wait, I'm confused. I make about $85k and I feel like I'm paying WAY more than 9% in taxes. Is that just cause I'm bad at math or am I doing something wrong on my returns? I use TurboTax but honestly just click through without understanding much.

You're likely looking at your withholding rather than your actual tax burden. Many people have more withheld from their paychecks than they actually owe, which is why they get refunds. Try looking at line 24 on your Form 1040 (total tax) and divide by your total income. That's your actual effective rate. Another possibility is that you're including FICA taxes (Social Security and Medicare) in your calculation, which adds about 7.65%. The OP was likely referring only to federal income tax in their 9.37% figure. If you include FICA, state taxes, and potential local taxes, the total percentage certainly increases.

Does it handle more complicated situations? I have some 1099 income alongside my W-2, plus some stock sales that always confuse me. Can this handle all that or is it just for simple tax situations?

IDK seems kinda sus that it can somehow find deductions that regular tax software misses? Does it actually file for you or is it just for analysis? Sorry but there's so many tax scams out there I'm always skeptical of new services.

It definitely handles multiple income sources including 1099s, W-2s, and investment income. The interface lets you upload all your forms, and it will analyze them together. It's especially helpful for finding the interactions between different types of income that might affect your deductions or credits. It's not a filing service - it's more of an analysis and education tool. It won't replace your regular tax software, but it helps you understand what's happening behind the scenes. What I found valuable was it showed me which deductions I was eligible for but wasn't claiming, so I could go back to my regular tax software and make sure I included them.

How exactly does that even work? Do they just have a bunch of people constantly calling the IRS on multiple lines or something? I don't really get how they can get through faster than I could.

Yeah right, so you're saying this magical service somehow gets priority access to IRS agents when millions of people can't get through? Sounds like complete BS to me. The IRS phone system is notoriously understaffed and backed up - no way some third party service has a secret back door.

They have an automated system that calls the IRS and navigates the phone tree for you. It stays on hold so you don't have to, and when a real person answers, that's when they call you and connect the call. It's not that they have priority access - they're just willing to stay on hold for hours so you don't have to. The reason it works is simple math - it's extremely inefficient for millions of individual people to each wait on hold, but if a service does that waiting for thousands of people simultaneously, they can make it economical. I was definitely skeptical too but it actually did exactly what they claimed.

You've got a good point about the total tax picture. I included sales tax in my second calculation which pushed it up to 12.54%, and I'm lucky to live in a state with relatively low income tax. California definitely hits harder with the state income tax. Do you feel like you get good value from the services your taxes provide there? I sometimes wonder if I'd be willing to pay more if I saw better infrastructure and public services where I live.

Regarding California value - it's honestly mixed. Some things are amazing like certain parks and public universities, but other infrastructure is crumbling. I think the issue isn't necessarily tax rates but efficiency of spending. Comparing to friends in Europe, they pay higher rates but seem to get more consistent services across the board. Here it feels like a patchwork where some things are world-class and others are embarrassingly bad. It's frustrating paying substantial taxes and still having to drive around potholes that have been there for years.

This is a bit misleading though. Very few people actually paid those high rates back then because there were way more loopholes and deductions. The effective tax rates weren't that different from today for most income levels. The tax code has been simplified in some ways, but the actual amount collected hasn't changed as drastically as just looking at the top rates would suggest.