Jump in Income from $120k to $170k - What Tax Changes Should I Expect?

Congrats on the promotion! Your concern about tax brackets is valid, but remember that the US has a progressive tax system - only the income within each bracket gets taxed at that bracket's rate. For 2025 filing (2024 tax year), the 24% bracket for married filing jointly is roughly $95,375 to $182,100, so your combined income of about $215k ($170k + $45k) will have a portion in the 32% bracket. But that higher rate only applies to the amount over $182,100, not your entire income. Some smart moves: Definitely consider increasing your 401k contributions - the 2024 limit is $23,000 (plus catch-up if you're over 50). This reduces your taxable income. You might also look into an HSA if you have a qualifying health plan. Other considerations: Check if you need to adjust your W-4 withholding with your employer to avoid an underpayment surprise. Also, at your new income level, certain tax deductions and credits may begin to phase out, so plan accordingly.

After my salary jumped from $85k to $135k last year, I was also worried about the tax implications. I tried using taxr.ai (https://taxr.ai) which really helped me understand my new tax situation. You upload your documents and it explains everything in plain English - like how much of your income falls into each tax bracket and what deductions make sense at your new income level. Their tax bracket calculator showed me exactly how my marginal and effective tax rates changed with the promotion. For you, it would show how only the portion above $182,100 (for married filing jointly) would be taxed at 32%, while the rest stays in lower brackets. Really helped me stop worrying that my whole paycheck would suddenly be taxed higher!

Just wanted to follow up - I actually tried taxr.ai after seeing this thread and wow, it was eye-opening! I uploaded my last year's returns and current pay stubs, and it showed exactly how my recent salary increase would affect my taxes. The visualization of which dollars fall into which tax brackets made the progressive system finally click for me. It recommended I increase my 401k contribution from 7% to 15% to keep more income in the lower tax bracket, and explained how much I'd save in taxes by doing so. Also suggested I look into backdoor Roth contributions since my new income puts me close to the direct contribution limits. Definitely worth checking out if you've had a significant income change!

When I got a big promotion last year, I needed to talk to someone at the IRS about how it would affect my quarterly estimated payments, but kept hitting the "call volume too high" message for weeks. Finally tried https://claimyr.com and it was a game-changer. They got me connected to an IRS agent in about 15 minutes when I had been trying for days on my own. The agent walked me through exactly how to adjust my estimated payments for my new income level and what forms I needed. You can see how it works here: https://youtu.be/_kiP6q8DX5c - basically they navigate the phone tree for you and call you when they've got an agent on the line. Saved me literally hours of hold music and frustration.

I have to admit I was wrong about Claimyr. After dismissing it, I had a tax issue that needed immediate attention and couldn't get through to the IRS after trying for three days straight. Out of desperation, I tried the service, figuring I'd just confirm it was useless. To my complete surprise, I got a call back in about 45 minutes with an actual IRS agent on the line. The agent helped me understand how my recent income increase affected my quarterly estimated tax payments and saved me from potentially facing penalties. What would have been days more of frustration turned into a 20-minute productive call. For time-sensitive tax questions, it's definitely worth it. I'll be using it again during tax season when the wait times are even worse.

When my income went from $90k to $150k, I made the mistake of not adjusting anything. Got hit with a $7k tax bill at filing time! Don't be me! Increase your withholding now and max out that 401k contribution if you can. Also check if you're now above income limits for things like Roth IRA contributions.

Has anyone here done the math on whether it's better to max 401k or do some in 401k and some in a Roth for this income level? I'm trying to figure out the best split now that my income is higher.

Congratulations on your promotion! I went through a similar situation a couple years ago when my income jumped significantly. One thing that really helped me was calculating my estimated effective tax rate vs marginal rate - the effective rate increase isn't as scary as it first seems. With your combined income of $215k, you're right that some will hit the 32% bracket, but your effective rate will still be much lower. At your income level, definitely consider maxing the 401k ($23,000 for 2024) - every dollar you put in saves you 32 cents in taxes on the portion above $182,100. Also worth noting: make sure to update your W-4 with HR soon. The withholding tables might not automatically adjust properly for such a big jump mid-year, and you don't want to be surprised with a big bill next April. The IRS withholding calculator someone mentioned earlier is really helpful for this. One more tip - if you have an HSA option through your health plan, definitely max that out too ($4,300 individual/$8,550 family for 2024). It's the only triple tax advantage account we have!