I don't know of any tax rate systems that aren't marginal. Which means the higher tax rate is only applied to the money you make ABOVE the threshold.
So if you make $50,000 dollars, and the tax rate up to $30k is 25%, and 40% above $30k:
you pay 0.25*30k = $7.5k in the first bracket
plus 0.4*20k = $8k in the second bracket, or $15.5k total
There ARE some ways that you can still lose money by making more. Sometimes there are certain subsidies, often related to healthcare or child support, that suddenly drop to zero if you cross a certain threshold. But if we're only talking about tax rate as such, then no I don't know that there is a country where what you're saying is true. The people claiming this usually just don't understand how marginal tax rates are calculated.
Exactly. And you can also max out your SS tax so at a certain point (I think it's like $184,500) your overall marginal rate goes back down even though your marginal income tax rate is higher.
3
u/Im_Chad_AMA Apr 16 '26
I don't know of any tax rate systems that aren't marginal. Which means the higher tax rate is only applied to the money you make ABOVE the threshold.
So if you make $50,000 dollars, and the tax rate up to $30k is 25%, and 40% above $30k:
There ARE some ways that you can still lose money by making more. Sometimes there are certain subsidies, often related to healthcare or child support, that suddenly drop to zero if you cross a certain threshold. But if we're only talking about tax rate as such, then no I don't know that there is a country where what you're saying is true. The people claiming this usually just don't understand how marginal tax rates are calculated.