Regarding tax brackets, there is some math not being considered. To take the top "Tax bracket" number and applying it to ALL earnings is not how it works. In both Spain and the U.S., there is a progressive tax. The "37%" applies ONLY to the earnings over 35,201 euros. So in your example, making 40,000, only the top 4800 is taxed at 37%. Here is the current scale for Spain's tax rates in 2023: Up to €12,450: 19% €12,451-€20,200: 24% €20,201-€35,200: 30% €35,201-€60,000: 37% €60,001-€300,000: 45% More than €300,000 47%
You're totally right. I didn't look into that enough. So, if I've done the math right, the total tax on 40k US would be $4,580 and the total tax on 40k in Spain would be $10,500. Still a significant difference between the two, but not as drastic on the total amount in Spain. Right?
@@traveltomoney Yes, it is significantly more than the U.S., but somewhere in the neighborhood of your estimate. You also have to factor in standard deduction of 5,500 euros if under 65 years or 6,700 if over 65, so that reduces your taxable income further. I have a spreadsheet estimating what my tax burden will be and when I get down to taxable income of 45,000 euros, I'm calculating about 10,200 in tax.
@@keb107 - because of a double taxation agreement, you will likely pay the higher amount in Spain, and claim a “foreign tax paid” credit on your U.S. return. You don’t have to pay twice.
Thank you for watching! 🙂 That's good to know about MX. I've definitely considered it as another good option for budget-friendly living ... other benefits are similar time zones and easy flights.
My dream from childhood has always been to travel the world at the age of 25 due to a retina problem I lost most of my eye sight but still I wanna pursue my dreams Watching these videos really motivates me to run after my dreams 🎭 I wanna be an inspiration for others through my channel 💙
Great episode. I love that you share the detailed breakdown of expenses. I was surprised that you are paying $180/mo! Can you provide a little more detail? I assume since you are not on a permanent type of Visa you have private insurance. Where should a non-Visa traveller look for insurance?
Hi Mark! Thanks! I'm actually part of a co-op in the US. It's not technically traditional insurance, but it meets the government requirements. Basically, I pay a monthly "share." If I have a medical need ... let's say a broken leg ... I will pay an initial "unshareable amount" (similar to a deductable) and EVERYTHING after that is covered at 100%. The cool thing is that unlike US health insurance, the organization I went with covers me for medical costs anywhere in the world. I love it!
Can you buy a house upfront without a mortgage (with a lawyer)? Im in Australia, Spanish citizen, but never been to spain❤. Thanks for your wonderful information 😊😊
Yes, it's pretty simple to buy a house if you're doing it in cash. The last house I purchased in Spain, I wasn’t even in the country. I've given my attorney power of attorney so he can buy and sell on my behalf without me having to buy a flight every time.
How much it cost and how much you make, net result is the bottom line. Spain is cheaper but less salaries it depends on individual situation for me was not good live better in France. chau
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That was so informative! Thanks so much for sharing those numbers
Great information and breakdown of numbers. Thanks!
Thanks for watching! 🙂
Regarding tax brackets, there is some math not being considered. To take the top "Tax bracket" number and applying it to ALL earnings is not how it works. In both Spain and the U.S., there is a progressive tax. The "37%" applies ONLY to the earnings over 35,201 euros. So in your example, making 40,000, only the top 4800 is taxed at 37%. Here is the current scale for Spain's tax rates in 2023:
Up to €12,450: 19%
€12,451-€20,200: 24%
€20,201-€35,200: 30%
€35,201-€60,000: 37%
€60,001-€300,000: 45%
More than €300,000 47%
You're totally right. I didn't look into that enough. So, if I've done the math right, the total tax on 40k US would be $4,580 and the total tax on 40k in Spain would be $10,500. Still a significant difference between the two, but not as drastic on the total amount in Spain. Right?
@@traveltomoney Yes, it is significantly more than the U.S., but somewhere in the neighborhood of your estimate. You also have to factor in standard deduction of 5,500 euros if under 65 years or 6,700 if over 65, so that reduces your taxable income further. I have a spreadsheet estimating what my tax burden will be and when I get down to taxable income of 45,000 euros, I'm calculating about 10,200 in tax.
p.s. I can share spreadsheet with you as a template for you to play with, if you like. I love your content! Thanks Nicole
@@MikeS29is the $10,200 tax for US and Spain or Spain only?
@@keb107 - because of a double taxation agreement, you will likely pay the higher amount in Spain, and claim a “foreign tax paid” credit on your U.S. return. You don’t have to pay twice.
Hi, just closed Wednesday on my large 2 bedroom condo with sea views in Canico, Madeira😊
Oh my goodness! How exciting! Congratulations, my friend! 🎉
We live in Mazatlan MX part time. It’s less but not hugely so. Great vid. Lots of info.
Thank you for watching! 🙂 That's good to know about MX. I've definitely considered it as another good option for budget-friendly living ... other benefits are similar time zones and easy flights.
My dream from childhood has always been to travel the world at the age of 25 due to a retina problem I lost most of my eye sight but still I wanna pursue my dreams
Watching these videos really motivates me to run after my dreams 🎭
I wanna be an inspiration for others through my channel 💙
Great episode. I love that you share the detailed breakdown of expenses. I was surprised that you are paying $180/mo! Can you provide a little more detail? I assume since you are not on a permanent type of Visa you have private insurance. Where should a non-Visa traveller look for insurance?
Hi Mark! Thanks! I'm actually part of a co-op in the US. It's not technically traditional insurance, but it meets the government requirements. Basically, I pay a monthly "share." If I have a medical need ... let's say a broken leg ... I will pay an initial "unshareable amount" (similar to a deductable) and EVERYTHING after that is covered at 100%. The cool thing is that unlike US health insurance, the organization I went with covers me for medical costs anywhere in the world. I love it!
What is the name of the health co-op?
eerrr, tax isn't calculated like that. The 37% isn't on al of the income - only on the last step. Same with the 12%. And then the deductions.
Can you buy a house upfront without a mortgage (with a lawyer)? Im in Australia, Spanish citizen, but never been to spain❤.
Thanks for your wonderful information 😊😊
Yes, it's pretty simple to buy a house if you're doing it in cash. The last house I purchased in Spain, I wasn’t even in the country. I've given my attorney power of attorney so he can buy and sell on my behalf without me having to buy a flight every time.
@traveltomoney thank you!
Do you offer video consultations, I have questions for moving to spain from Australia, happy to pay you!
Yes, I do! I mostly do coaching about buying a house in Spain and the process. You can find my booking information at traveltomoney.com/coaching 🙂
I’ve heard that a US government pension is exempt from taxes in Spain?
I wonder if a retired couple can make a living in Madrid with a pension of $7000.00per month?
$7,000 a month should give you a very comfortable life almost anywhere in Spain, even with Madrid being one of the higher cost areas. 🙂
Of course you can
I was trying to find your video where you were talking about traveling with you, can you send that link?
I always wanted to live in Spain in retirement, but taxes will kill that dream
How much it cost and how much you make, net result is the bottom line. Spain is cheaper but less salaries it depends on individual situation for me was not good live better in France. chau