Turn the lesson into action. Run these against your own numbers — that is where it becomes real.
What people think a raise costsThe whole salary re-taxed
What it actually costsOnly the dollars above the line
Brackets are marginal. Moving into a higher bracket never leaves you with less, because only the income above the threshold is taxed at the higher rate.
Marginal rate22%What your next dollar costs
Effective rate14%What all of it actually cost
The one people quoteMarginalThe one they feel: effective
- Find your last pay stub: what is the gap between gross and net, and where does it go?
- Would a raise actually cost you money? (No — confirm you understand why.)
- W-2 or 1099 — are you setting aside enough for taxes?
Put it into practiceRun your own numbers with the Basis Points Take-Home Pay Calculator, then come back and finish your plan above.