There is no way you owe $7500 in federal taxes on a $40k/year salary.
In the worst case (single or married filing separately; in this range the numbers look the same), the standard deduction is $6350 and the single personal exemption is $4050 in 2017. So your taxable income is $29,600 assuming you aren't putting any pre-tax money into retirement savings.
The 10% tax bracket for those filing statuses goes to $9325 in 2017. The 15% bracket goes to $37,950. Tax on $29,600 ends up being $3974.
To get to $7500 in tax you have to have about $47k of taxable income, and hence about $57k of gross income, for single or married-filing-separately filers.
For married filing jointly filers, you have to have about $56k of taxable income, standard deduction is $12,700, two personal exemtions is $8100, so you need at least $76,800 in gross income to owe this much.
> To get to $7500 in tax you have to have about $47k of taxable income, and hence about $57k of gross income
The OP said “most people don’t pay $7500...” which is not true since I said you have to have “at least 40K+ salary in order to afford that $35k+ car. I did not say you have to have 40k salary to pay 7500$+ in taxes
I admit I don't quite understand. What you wrote was "are making at least 40k / year and owe that much in federal taxes". My point was that you don't "owe that much in federal taxes" unless your salary is at least $57k.
I have no opinion on what the actual incomes are of people who buy $35k cars, because I don't have any data to that effect. I'd really _hope_ they all make more than $57k/year gross, but given the weird things people do with debt I'd love to see actual data on this point.
> if you are buying a $35K car, I sure hope you are making at least $56K.
Well, right. If _I_ am buying it, I sure hope I am too!
I tried finding some data on what people actually do, but the writing online on the topic seems to be a morass where "median" and "average" are used interchangeably, which makes all the numbers more or less useless. :(
In the worst case (single or married filing separately; in this range the numbers look the same), the standard deduction is $6350 and the single personal exemption is $4050 in 2017. So your taxable income is $29,600 assuming you aren't putting any pre-tax money into retirement savings.
The 10% tax bracket for those filing statuses goes to $9325 in 2017. The 15% bracket goes to $37,950. Tax on $29,600 ends up being $3974.
To get to $7500 in tax you have to have about $47k of taxable income, and hence about $57k of gross income, for single or married-filing-separately filers.
For married filing jointly filers, you have to have about $56k of taxable income, standard deduction is $12,700, two personal exemtions is $8100, so you need at least $76,800 in gross income to owe this much.