One of the common questions that comes up about Cobee is whether we are using the correct percentage to calculate savings. These questions often arise due to confusion between the percentage that appears on your paycheck and the percentage we apply in Cobee to calculate savings. Below, we will discuss both percentages and why we are using the correct percentage. In addition, we will expand on the information, so you can better understand the issue.
- Average Rate: The average rate refers to the average tax a worker pays on their total income in Euros. To illustrate this with an example, let's say you have an annual salary of 30.000€ and you pay 6.000€ in taxes. In this case, the average rate would be 20% (€6,000 divided by €30,000). This means that, on average, 20% of your income goes to pay taxes.
- Marginal Rate: The marginal rate refers to the percentage of tax that is applied to the highest part of your income in euros. In the Spanish tax system, taxes are graduated in different brackets. For example, let's consider a worker with a gross salary of €35,000:
- For the first €12,450, you could pay 19% tax.
- For additional income above that amount up to €20,200, you could pay 24% tax.
- For additional income between €20,200 and €35,200, you could pay 30% tax.
In this case, the marginal rate would be 30%.
It is important to note that the difference is that the average rate is a general average of the tax you pay on all your euro income, while the marginal rate applies only to a specific part of your euro income and represents the highest rate of tax you would pay on that part.
In the Cobee's context, as you use the exempt benefits of flexible compensation, you are reducing the highest tax bracket. This means you can save more money by lowering the amount of tax you pay on the highest part of your income.