A pay rise that pushes you into a higher tax bracket never reduces your take-home pay, because only the portion of income above the bracket threshold is taxed at the higher rate. Everything below it continues to be taxed exactly as before. Going from $66,000 to $68,000 in 2026 as a single filer crosses into the 22 per cent band and still leaves $1,457 more in your account.
The belief that it works otherwise is durable because the marginal rate is the number people are told and the effective rate is the number they experience. Those are different quantities and they are usually about five points apart.
What does the crossing actually look like?
Using the 2026 federal tables for a single filer with the standard deduction of $16,100, no state tax and no pre-tax deductions:
| Gross salary | Taxable income | Federal tax | Take-home | Marginal rate |
|---|---|---|---|---|
| $66,000 | $49,900 | $5,740 | $55,211 | 12% |
| $66,500 | $50,400 | $5,800 | $55,613 | 12% |
| $67,000 | $50,900 | $5,910 | $55,965 | 22% |
| $68,000 | $51,900 | $6,130 | $56,668 | 22% |
The 22 per cent band starts at $50,400 of taxable income, which is $66,500 of gross salary once the standard deduction is added back. Above that point each additional dollar is taxed at 22 per cent — and the $50,400 below it is still taxed at 10 and 12 per cent, exactly as it was.
The $2,000 raise attracts $543 of additional tax and delivers $1,457. There is no salary at which the arithmetic reverses.
One further detail explains why the myth survives: withholding. Payroll systems project your annual income from the current period, so the pay packet immediately after a raise can be withheld at a rate that assumes the new salary applied all year. The take-home figure dips relative to expectation for one or two periods and then settles, and the excess comes back at filing.
Where do the bands actually start?
Bracket tables are published against taxable income, and taxable income is what is left after the standard deduction. Converting them to gross salary makes them usable.
| Rate | Taxable income above | Gross salary above |
|---|---|---|
| 10% | $0 | $16,100 |
| 12% | $12,400 | $28,500 |
| 22% | $50,400 | $66,500 |
| 24% | $105,700 | $121,800 |
| 32% | $201,775 | $217,875 |
| 35% | $256,225 | $272,325 |
| 37% | $640,600 | $656,700 |
Those gross figures assume the standard deduction and no other adjustments. Itemising, pre-tax contributions or a second income all move the line.
Marginal or effective — which one should you use?
Marginal for decisions about additional income, effective for understanding the salary as a whole. On $85,000 the marginal rate is 22 per cent while the effective rate, including Social Security and Medicare, is 19.26 per cent.
| On $85,000 single | Amount |
|---|---|
| Federal income tax | $9,870.00 |
| Social Security at 6.2% | $5,270.00 |
| Medicare at 1.45% | $1,232.50 |
| Total | $16,372.50 |
| Take-home | $68,627.50 |
Use the marginal rate when asking what an extra shift, a bonus or a side contract is worth. Use the effective rate when asking what the job pays.
What does a pre-tax deduction change?
It reduces income tax and leaves the payroll taxes alone. Diverting 6 per cent of that $85,000 — $5,100 — into a pre-tax retirement plan cuts taxable income to $63,800 and federal tax to $8,748, a saving of $1,122. Social Security and Medicare are unchanged at $5,270 and $1,232.50, because they are charged on gross wages.
The effective rate falls from 19.26 to 17.94 per cent, and take-home falls by $3,978 — because $5,100 went into the plan and $1,122 came back as tax. That is the actual trade, and it is a better one than the take-home figure alone suggests.
Where does the rate genuinely jump?
At the payroll tax thresholds rather than the income tax ones. Social Security stops at a wage base of $184,500, so earnings above that are 6.2 per cent cheaper at the margin. The additional Medicare levy of 0.9 per cent starts at $200,000, going the other way.
The result is a small region where the marginal burden falls as income rises. On $200,000 the effective rate is 25.54 per cent with a 24 per cent marginal income tax rate; on $250,000 it is 26.73 per cent with a 32 per cent marginal rate.
Questions people ask
Is there any case where a raise reduces take-home? Not through the tax bands. It can happen through benefit cliffs — a subsidy or credit that withdraws sharply at a threshold — which is a different mechanism and worth checking separately if one applies to you.
Why did my bonus get taxed so heavily? Withholding, not tax. Supplemental payments are often withheld at a flat rate that exceeds your effective rate, and the difference comes back at filing.
Do pre-tax deductions reduce Social Security? Retirement deferrals do not. Some benefit deductions do, which is why two payslips with identical gross figures can show different FICA.
Where do the thresholds come from? The IRS publishes them each autumn for the following year, indexed to inflation, which is why they move slightly every January.
Does a state income tax change the conclusion? Not the direction of it. State schedules are progressive in most states and flat in several, and in neither case does crossing a threshold reduce take-home pay.
What is the standard deduction actually doing? Taxing the first $16,100 of a single filer’s salary at zero per cent. It is the reason the gross-salary column above sits so far above the published taxable-income thresholds.
Only the top slice moves, and only the top slice is taxed at the top rate. The paycheck calculator shows the marginal and effective rates side by side, the percentage calculator handles the raise arithmetic, and the inflation calculator tells you whether the raise was one in real terms.