• NotAnotherLemmyUser@lemmy.world
    link
    fedilink
    arrow-up
    4
    ·
    edit-2
    11 hours ago

    So, there are some misconceptions about this on both sides. While some may misunderstand how tax brackets work, there absolutely are certain income thresholds where barely going over a certain amount will net you less money overall.


    Edit: To clarify, you should accept the raise. In most cases all you need to do to avoid “losing money” at any of these points is to lower your AGI by contributing to an IRA, 401K, etc.


    For example (using 2025 numbers here for a single filer):



    • Medicare Premium Increase (for those on medicare)
      @ $106k your medicare tax increases by $888, so you don’t want a raise that puts you between $106k and $~107k
      @ $133k medicare tax increases by $1.3k, so you don’t want a raise between $133k and $134k
      @ $167k medicare tax increases by $1.3k again
      @ $200k medicare tax increases by $1.3k again
      @ $500k medicare tax increases by $444… https://www.nerdwallet.com/article/insurance/medicare/what-is-the-medicare-irmaa

    • Roth IRA @ $150k you start to lose out on benefits from having a Roth IRA @ $165k you can no longer contribute to a Roth IRA, so if you’re close to this limit, you’re going to do what you can to stay under this income bracket as much as possible (contribute to an HSA, 401k, IRA, etc). https://www.nerdwallet.com/article/investing/roth-ira-contribution-limits


    There are probably a few other taxes/credits I didn’t include, but this is just a quick example with what I could look up at the moment.