The myth
Many taxpayers worry that a raise will "push them into a new bracket" and leave them with less. That is not how the U.S. system works.
How brackets are applied
The federal income tax is marginal — each slice of your income is taxed at the rate for that bracket. Your first dollars are taxed at 10%, the next at 12%, and so on. A higher bracket only applies to the dollars inside that bracket.
Effective vs marginal rate
- Marginal rate: the rate your next dollar is taxed at.
- Effective rate: total tax divided by total income — almost always lower than your marginal rate.
Practical takeaway
Earning more always increases your take-home. Use the Income Tax Calculator to see exactly how a raise affects you.