How brackets really work
Tax brackets are slices. Your first slice of income is taxed at 10%, the next at 12%, the next at 22%, and so on. Moving into a new bracket only changes the rate on the dollars in that new slice.
Example: a single filer in 2026
The 22% bracket starts at $50,400 of taxable income, which is a salary of about $66,500 after the standard deduction.
- Salary $66,000: taxable income $49,900, all at 10% and 12%.
- After a $1,000 raise to $67,000: taxable income $50,900.
- $500 of the raise is taxed at 12%: $60
- $500 is taxed at 22%: $110
Federal income tax on the raise: $170. With Social Security and Medicare (7.65%, or $76.50), you keep $753.50 of the $1,000, before any state tax. Your pay below the threshold is taxed exactly as before.
- Federal income tax $170 more
- $66,000: $5,740 $67,000: $5,910
- Social Security and Medicare $77 more
- $66,000: $5,049 $67,000: $5,126
You keep $753.50 of the $1,000 raise
What you keep from a raise
After federal, state, Social Security and Medicare taxes, for a single filer:
| Salary | Keep of a $5,000 raise, no state income tax | In California |
|---|---|---|
| $30,000 | $4,018 (80%) | $3,814 (76%) |
| $50,000 | $4,018 (80%) | $3,653 (73%) |
| $75,000 | $3,518 (70%) | $3,053 (61%) |
| $100,000 | $3,518 (70%) | $2,988 (60%) |
| $150,000 | $3,418 (68%) | $2,888 (58%) |
| $250,000 | $3,283 (66%) | $2,741 (55%) |
You keep more than half of every raise, even in a high-tax state. The share you keep shrinks as your pay rises, because each extra dollar is taxed at your top rate, but it never reaches zero.
Marginal and effective rates
Your marginal rate is the tax on your next dollar: the one that matters for a raise. Your effective rate is your total tax divided by your total pay, and it’s always lower, because the first slices of your pay are taxed at lower rates. A single filer earning $75,000 is in the 22% bracket, but pays well under 22% of their pay in federal income tax. See tax brackets explained.
Why the myth sticks
Your paycheck can feel smaller than expected after a raise: more goes to tax, 401(k) contributions set as a percentage go up too, and a bonus may be withheld at a flat 22%. But the total you take home still rises. The paycheck calculator shows how much of every extra $100 you keep.
The rare exceptions
Some benefits stop completely at an income limit, a “cliff”. If a raise takes you just over it, you can lose more in benefits than you gain:
- Some state child care subsidies and housing programs.
- Medicaid and CHIP income limits.
- Health insurance subsidies on the Marketplace for some households.
Tax credits that phase out gradually, like the EITC, reduce what you keep from a raise but don’t leave you worse off overall. If you’re near a cliff, check before turning down a raise. Contributing more to a traditional 401(k) can bring your income back under the limit while keeping the raise.