What do your utility bills really cost, once you count the income behind them?What do utilities really cost once you count the income behind them?
Example price
$210
Example all in
$210
nothing added on top
Example earn first
$299
Single filer on $75,000 in Harris County, Texas. Your calculator below uses your settings.
You can't opt out of this bill, and every state taxes it a little differently.
A bill you cannot opt out of, taxed differently in almost every state.
Utility bills are strange — some states don't tax them at all, treating them as a basic need. Others tax them at a lower rate than normal purchases. And some tax them at the full rate, plus extra utility-only fees on top. Since you can't really skip this bill, and it comes every month, the income behind it adds up quietly — even though almost nobody stops to look at it closely.
Residential utilities sit in an unusual position: many states exempt them from sales tax entirely as a necessity, others tax them at a reduced rate, and a number apply the full rate plus separate utility-specific levies. Because the bill is non-negotiable and recurring, the gross income behind it compounds quietly — it is one of the largest lines in most baskets and one of the least examined.
- We assume no sales tax applies, which is the most common way states treat home utility bills. Some states do tax them, sometimes at a lower rate, often with extra fees added on — if yours does, type in your own combined rate.Sales tax is modeled as not applying, which reflects the most common residential treatment. Several states do tax utilities, sometimes at a reduced rate and often with additional franchise or regulatory fees on the bill — enter your own combined rate if yours does.
- Extra utility fees and surcharges depend on your provider and aren't counted separately here. Enter your real total bill to capture them.Utility-specific surcharges and regulatory riders vary by provider and are not modeled separately; enter your actual all-in bill to capture them.
Residential utility taxation genuinely varies — some states exempt it as a necessity, others tax at a reduced rate, and several apply the full rate plus utility-specific levies. None of that is modeled: the spend side here is zero in every state, so only income tax moves this figure. TODO(verify) — needs a sourced per-state utility tax dataset before it can claim more.
The income tax in this figure is still computed from Texas and your filing status.
to cover utilities
- Income tax (federal, FICA, state)30%$89
- Utilities70%$210
- Income tax (federal, FICA, state)
- Utilities
Data for nerds — sources, confidence and assumptions
Data for nerdssources, confidence, assumptions
Where each number comes from
| Component | Amount | Confidence |
|---|---|---|
| Item price | $210.00 | Your figureHigh confidence. You supplied this, so it is exact by definition. |
| Income tax to earn it | $88.51 | StatutoryHigh confidence. This number is the law — federal, FICA and state tax rates are published rates, so the only real risk is staleness. |
Jurisdiction applied
- State:
TX - Local income tax: none selected
Assumptions
- We assume no sales tax applies, which is the most common way states treat home utility bills. Some states do tax them, sometimes at a lower rate, often with extra fees added on — if yours does, type in your own combined rate.
- Extra utility fees and surcharges depend on your provider and aren't counted separately here. Enter your real total bill to capture them.
- Sales tax is modeled as not applying, which reflects the most common residential treatment. Several states do tax utilities, sometimes at a reduced rate and often with additional franchise or regulatory fees on the bill — enter your own combined rate if yours does.
- Utility-specific surcharges and regulatory riders vary by provider and are not modeled separately; enter your actual all-in bill to capture them.
Sources
What this commitment adds up to
$35,821 over 10 yrsUtilities, every month — $3,582 of income every year, and 2 work weeks of your life.
Year by year
| Year | Spent | Invested instead |
|---|---|---|
| 1 | $2,520 | $2,520 |
| 2 | $5,040 | $5,216 |
| 3 | $7,560 | $8,102 |
| 4 | $10,080 | $11,189 |
| 5 | $12,600 | $14,492 |
| 6 | $15,120 | $18,026 |
| 7 | $17,640 | $21,808 |
| 8 | $20,160 | $25,855 |
| 9 | $22,680 | $30,185 |
| 10 | $25,200 | $34,817 |
Prices and wages are held at today's levels, and the return above is inflation-adjusted to match — consistent by design. The invested-instead line assumes the cash is contributed at the end of each year and left alone; it is an alternative use of the same money, never an extra cost on top.
Your position in the tax system
29.65% on the next dollarEvery extra dollar you earn is taxed at your marginal rate, not your average one — which is why a purchase costs more to fund than a paycheck stub suggests.
Marginal rates are read in gross-income terms: below the standard deduction an extra dollar of pay adds nothing to taxable income, so the true rate there is 0%, not the lowest bracket's. Excludes pre-tax deductions (401(k), HSA), which would lower all three.
Same purchase, different state
TX is #7 of 51The purchase inputs and income stay the same. Your row uses your calculator settings; other states use example counties and omit local income tax. Spread across all 51: $42, from Alaska to Oregon.
- $299
- Texasyou$299
- $341
Choose a state name to compare against somewhere else.
Where every dollar goes
30% never reaches youThe $298.51 you must earn, followed to where it lands. Select a band to isolate it.
- Federal income tax$65.67
- FICA (Social Security + Medicare)$22.84
- Utilities$210.00
Each tax layer is the extra tax this purchase causes — that layer's tax at your income subtracted from its tax at your income plus the gross-up — so bracket boundaries the purchase straddles are handled correctly rather than smoothed over with an average rate.
Is a raise actually a raise?
you keep 70%A raise arrives on top of everything you already earn, so it is taxed at your marginal rate — not the average rate on your whole salary.
Federal, FICA, state and any local income tax — no pre-tax deductions, benefit changes, or payroll withholding quirks, all of which move the real figure. Moving into a higher bracket never taxes the income below the threshold: only the dollars above it pay the higher rate.
Keep going
What you must earn to buy it
A $75,000 Texas salary
| Sticker price | $210 |
|---|---|
| Out of pocket | $210 |
| Income tax on earning it | $88.51 |
| Hours of work | 8.3 hr |
29.65% of that pay never reaches the purchase.
If the money stayed put
A $75,000 Texas salary
| Spent today | $210 |
|---|---|
| Growth given up | $166 |
| Pay needed to buy it | $299 |
Assumes a 6% annual return that you can edit.
A year of that habit
A $75,000 Texas salary
| Spent a year | $54,600 |
|---|---|
| You must earn | $78,514 |
| Times a year | 260 |
Work hours include time spent earning the tax.
What it adds up to
A $75,000 Texas salary
| Cash paid | $25,200 |
|---|---|
| Hours of work | 5.7 work months |
| A year | $2,520 |
| Growth given up | $8,016 |
Today’s price held constant; no price rises assumed.
Questions people ask
Why does a small regular cost need such a big salary behind it?
Because you pay it out of what is left, and what is left is the small end of your salary. Every dollar spent on this has already been through income tax and payroll tax, so a cost that repeats has to be earned again and again at the gross rate — not the net one.
Is the tax on this the same wherever I am?
Broadly. The charge on this category is federal or does not exist at state level, so one national figure is the honest answer. What still varies is your income tax, and that is the earning side rather than the spending side.
What does this figure leave out?
Specific things, named below rather than glossed over. Where the real rule has an edge this model does not follow, the note says so, so you can judge whether your purchase falls inside it.
Why does a recurring outlay require disproportionate gross income?
Consumption is funded from post-tax income, so required gross income is the outlay divided by one minus the marginal rate on the relevant income slice. For a recurring cost that grossed-up figure recurs at the same cadence, which is why annualised gross requirement exceeds the nominal annual outlay by the full marginal wedge.
Why is this purchase modeled nationally rather than per state?
This category's spend-side treatment is uniform nationally: either the levy is federal, or no state imposes a general sales tax on it. A single national figure is therefore accurate rather than a simplification. Earn-side liability remains state-dependent and is computed separately.
What are the stated limits of this category's model?
Modeling limits for this category are stated explicitly on the page rather than inferred. They typically concern classification edge cases, per-item caps, or local levies outside the modeled base. Where a limit applies to a reader's specific purchase, the figure should be treated as a lower or upper bound as the note describes.