Quote:
Originally posted by AaronSJ@Aug 4 2004, 06:45 PM
No problem  -- It's a fairly common misconception about our taxation system. I actually had this discussion recently with a family member who was convinced that having an income in a higher tax bracket would result in considerably more taxes and even once turned down a promotion because of this belief.
If this was the case, you wouldn't see many people take jobs that earn $35,000 to $40,000... (and there are a lot of them in this country!).
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There is one caveat to this whole thing, and I've seen it happen. The formulas used for calculating withholding are not as robust as the actual tax formulas. I believe the withholding formulas take a more simplistic approach and apply a flat percentage on your whole income depending on which withholding bracket you are in. Therefore if your raise just passes the threshhold, you can get a paycheque that is less. You do end up with more money overall once you fill in your tax return, but it is possible to end up with less on a paycheque by making more.