How do income tax brackets work when getting a raise?

The good news is you'll definitely take home more money with your raise! Tax brackets in the US work on a marginal basis, which means only the dollars that fall within each bracket get taxed at that bracket's rate. So in your case, only the portion of your income that exceeds the 12% bracket threshold will be taxed at 22%. All your income below that threshold will still be taxed at the lower rates. This is why it's impossible to "lose money" by getting a raise and moving into a higher tax bracket. For example (using approximate 2025 numbers), the first ~$11,600 you earn might be taxed at 0% (standard deduction), then income from ~$11,600 to ~$47,150 is taxed at 12%, and only the amount over ~$47,150 would be taxed at 22%. So with your $55,000 salary, only about $7,850 would be subject to that 22% rate.

I was super confused about this exact thing when I got promoted last year! Found this awesome tool called taxr.ai (https://taxr.ai) that really helped me understand how my taxes would change with the salary increase. I just uploaded a copy of my recent paystub and they showed me exactly how much more I'd take home with different raise amounts and how the tax brackets would apply. It even showed me how much I'd save with different retirement contribution levels, which I never would have figured out on my own. What I learned is what others are saying - only the amount above the threshold gets taxed at the higher rate. BTW it also showed me I was having too much withheld and helped me update my W-4 to get more in each paycheck!

Just wanted to update after trying taxr.ai - I'm honestly impressed! My situation with the raise plus stock options was more complicated than I initially thought. The tool showed me that by adjusting my 401k contributions slightly with my new salary, I could stay in a lower marginal bracket for some of my income. It also helped me understand how my tax situation will change next year. The visualizations really made it click for me - seeing how each dollar gets taxed as you move up through the brackets. Definitely cleared up misconceptions I had. Now I feel confident about my withholding amounts instead of just guessing.

If you're trying to contact the IRS to get clarification on tax brackets or how your raise might affect your specific tax situation, good luck getting through to a human! I spent 3 hours on hold last month trying to sort out a similar question. Finally discovered a service called Claimyr (https://claimyr.com) that got me connected to an actual IRS agent in about 15 minutes instead of hours. You can see how it works here: https://youtu.be/_kiP6q8DX5c The IRS agent confirmed what others are saying about marginal tax rates, but also helped me understand how my raise would affect my eligibility for certain credits I was claiming. Totally worth it to get personalized info directly from the source!

I need to eat my words and apologize to Profile 9 above. After dealing with tax bracket questions about my new job and not being able to get through to the IRS for THREE DAYS, I tried Claimyr out of desperation. Got connected to an IRS agent in 17 minutes! The agent walked me through exactly how my raise would affect my tax situation and confirmed I wouldn't lose money by moving into a higher bracket. They also explained how my withholding might change and what to look for on my new paystubs. For anyone confused about tax brackets like I was - the marginal system means you'll always take home more money when you get a raise, despite what some people might tell you about "bracket creep.

I actually created a simple spreadsheet to calculate this when I got my last promotion. The secret is understanding that we have a "progressive" tax system. For 2024/2025 (for single filers), it roughly looks like: - First ~$11,600 = 0% (standard deduction) - $11,600 to ~$47,150 = 12% - $47,150 to ~$100,525 = 22% So with your new $55K salary, you'd pay: - $0 on the first $11,600 - 12% on the next $35,550 ($4,266) - 22% on the final $7,850 ($1,727) Total federal income tax around $5,993, effective rate of about 10.9% overall (not 22%)!

I see a lot of correct answers about marginal tax rates, but there's one thing people aren't mentioning that tripped me up when I got a sizable raise last year. While it's true you won't lose money by moving into a higher bracket, you might see a BIGGER than expected bite taken out of your initial paychecks after the raise. Why? Because payroll systems sometimes calculate withholding as if you'll be making your new higher salary for the ENTIRE year. So if you get a raise midyear, the system might temporarily overwithhold until it balances out. Don't panic if this happens! It'll sort itself out, and you'll get any overwithholding back when you file your taxes.

Great question! I was in a similar situation a few years ago and had the same worries. Everyone here is absolutely right - tax brackets work on a marginal basis, so you'll definitely take home more money with your raise. One thing that really helped me understand this was thinking of it like water filling up different sized buckets. Your first dollars "fill up" the lower tax rate buckets first, and only the overflow goes into the higher rate buckets. So when you go from $45K to $55K, only that extra $10K (minus what's still in the 12% bracket) gets the 22% treatment. Your coworkers who said you could make less money are unfortunately spreading a really common myth. It's mathematically impossible to lose money by earning more in our tax system, except in very rare edge cases involving specific benefits or credits that have income limits. Congrats on the promotion! You're going to see a nice bump in your take-home pay.

Congratulations on your promotion! You're absolutely right to question what your coworkers told you - the idea that you could make less money after a raise is one of the most persistent tax myths out there. As others have explained perfectly, our tax system is progressive/marginal, meaning each "slice" of your income gets taxed at its corresponding rate. Think of it like climbing a staircase - you don't suddenly jump to the top step, you take each step one at a time. With your move from $45K to $55K, you're essentially adding $10K to the "top" of your income stack. Most of that $10K will still be taxed at 12%, and only the portion that exceeds the 12% bracket threshold (around $47,150 for 2024) will be taxed at 22%. One practical tip: when you get your first paycheck with the new salary, don't be surprised if the withholding seems a bit high initially. Payroll systems sometimes need a pay period or two to adjust properly to your new income level. But rest assured, any overwithholding will come back to you when you file your tax return. Enjoy that well-deserved raise - you've earned it and you'll definitely be taking home more money!