Will a raise push you into a higher tax bracket and leave you with less?

Brackets apply to slices of income

The US federal income tax is progressive. Your taxable income is divided into slices, and each slice is taxed at its own rate. Moving into a higher bracket only changes the rate on the dollars that fall into that new slice.

For a single filer in 2026, the first $12,400 of taxable income is taxed at 10%. Income from $12,400 to $50,400 is taxed at 12%. Income from $50,400 to $105,700 is taxed at 22%, and higher brackets continue up to 37% on income above $640,600.

An example

Imagine someone earning a $70,000 salary in 2026, single, taking the standard deduction of $16,100. Their taxable income is $53,900.

Their federal income tax is built up slice by slice: 10% of the first $12,400 is $1,240, then 12% of the next $38,000 is $4,560, then 22% of the last $3,500 is $770. The total is $6,570.

This person is “in the 22% bracket,” but only $3,500 of their income is taxed at 22%. Their federal income tax is about 9.4% of their salary.

Marginal and effective rates

Those two percentages have names.

Your marginal tax rate is the rate on your next dollar of income. Here, it’s 22%. It’s the number that matters when you’re thinking about a raise, overtime or a side job.

Your effective tax rate is your total tax divided by your income. Here, it’s about 9.4% of salary. It’s the number that tells you how much of your income goes to federal income tax overall.

Confusing the two is what makes a raise look dangerous. Someone who hears “22% bracket” may imagine a fifth of all their income going to federal tax, when the real share is less than half that.

What happens with a $5,000 raise

Now suppose this person gets a $5,000 raise to $75,000. All of the new income falls in the 22% bracket, so federal income tax rises by $1,100. Social Security and Medicare take 7.65%, another $382.50.

They keep $3,517.50 of the $5,000 before state income tax, about 70%. Their take-home pay goes up. It goes up by less than $5,000, but it goes up.

When more income really can leave you worse off

For federal income tax brackets alone, earning more never reduces your take-home pay. But there are situations where a raise can cost more than expected, and they’re worth knowing about.

Some benefits phase out as income rises, such as the Earned Income Tax Credit, premium tax credits for marketplace health insurance, and eligibility for programs like Medicaid or childcare assistance. In some cases, crossing a threshold reduces or removes a benefit, and the loss can be larger than the raise. These are often called benefit cliffs. If you receive income-based benefits, it’s worth checking how a raise would affect them before assuming it’s a straightforward gain.

Some tax deductions and credits also shrink at higher incomes. And state income tax rules vary.

Using this when decisions come up

When you’re weighing extra income, think in terms of your marginal rate: federal, plus Social Security and Medicare, plus state. That combined rate tells you roughly what share of each additional dollar you’ll keep.

It also works in reverse. A pre-tax 401(k) contribution saves you tax at your marginal rate. For someone in the 22% bracket, contributing $1,000 lowers their federal income tax by about $220.

The salary to hourly calculator can help when comparing pay offers, and there’s more on how taxes and deductions shape a paycheck in why your paycheck is smaller than your salary.

The takeaway

A higher bracket only taxes the dollars above the threshold at the higher rate. For most people, a raise means more take-home pay, though less than the headline amount. The exceptions come from benefits and credits that phase out with income, not from the brackets themselves.

Written by the Maxint Content team and reviewed by the Maxint Editor team. How we create our content

Sources

• IRS: 2026 tax brackets and standard deduction
• IRS Revenue Procedure 2025-32 (2026 inflation adjustments)

Keep reading

• Why is your paycheck so much smaller than your salary?Where the money between your salary and your deposit goes, line by line.
• Should you take the standard deduction or itemize?How the two choices work, who tends to benefit from itemizing, and how to check.
• How are investment gains taxed, and why does holding longer matter?Short-term and long-term gains, the rates that apply, and what to think about before selling.

This article is general education about US personal finance, based on the assumptions and sources described in it. It isn’t financial, tax or legal advice, and examples use hypothetical people and figures.