This week the GOED officially launched the South Dakota Real Wage Calculator (SDRWC), a tool that calculates the impact of income taxes and cost of living on wages across the nation. The SDRWC allows you to accurately determine and compare your purchasing power – the after tax wages adjusted by cost of living – in over 400 cities nationwide.
Existing wage calculators (salary.com, bankrate.com, sperling’s.com, etc.) only take cost of living into account when determining the purchasing power of your wages. This approach leaves out the payroll taxes component which immediately reduces your wages by a range of 7% to over 40% (depending on where you live). To know how much income you really have available to spend, you first need to know your take home pay after taxes are withheld. This is where the South Dakota Real Wage Calculator differentiates itself.
The SDRWC starts with gross wages and accurately computes the following to determine your take home pay:
- Federal income tax
- State income tax
- Social Security tax
Once gross wages are adjusted by the above taxes, a cost of living factor (based on selected locations) is applied to arrive at purchasing power. This allows an individual to compare the relative value of wages in different cities across the U.S.
The combination of no state income tax and South Dakota’s low cost of living result in greater purchasing power for South Dakota wage earners.
Overall, the SDRWC is designed to be a workforce retention and recruiting tool for South Dakota.
- South Dakota businesses can use to recruit workers nationally.
- Graduating college/tech school students can assess the true value of multiple job offers.
- Wage earners can intelligently assess what their purchasing power will be in different cities or rural areas across the nation.
- Tax computations are prepared by the public accounting firm of Eide Bailly LLC
- Cost of Living factors are from the US Bureau of Economic Analysis’ Regional Price Parities (RPP)
The SDRWC will be updated annually to adjust for changes in state and federal tax law and annual RPP updates.
Categories: Data Tools