If we are giving 10% maaser from our income before paying income taxes Vs somebody who gives 10% maaser after paying income taxes, in essence is person who gives before income tax giving more?
For example, if two people made $50,000 income each.
– One gives maaser from top giving10% from $50,000 = $5,000. Then on remaining $45,000 paying income tax (tax example 35%) is left with $29,250.
– The 2nd person pays income tax (tax example 35%) on the $50,000 leaving him with $32,500 then giving 10% =$3,250 leaving him with $29,250
They both gave 10% but the first person gave higher amount of maaser. Which is the correct way and if you are person number one did you technically give more maaser?
The poskim say that you do not have to give maaser on the money that you will pay for income taxes, because that money is what it cost you to earn the rest of your money, and not considered earned regarding maaser. Therefore if you will be paying 35% on $50,000, your earnings regarding maaser are $32,500, therefore you only have to give $3,250 to tzedakah. The only thing is that if you give the tzedakah before the end of the fiscal year, you will get a tax break for the money that you donated, therefore if you gave $3,250 already, you will be only taxed on $46,750 which would leave you with $30,387.5, not $29,250. Meaning that you will have gained $1,127.50 by giving your tzedakah early. On this extra money you will give $112.75 to tzedakah, leaving you with a gain of $1,014.75, because you gave your tzedakah early.
The moral of the story is that it “pays” to be “zerizim makdimin l’mitzvos”!
Note: Tax laws change often, and this calculation is for the tax laws as of a few years ago.