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That's not how tax brackets work. > Because the U.S. tax system is a progressive one, as income rises, increasingly higher taxes are imposed. But those in the
by ppseafield 8y ago
That's not how tax brackets work.
> Because the U.S. tax system is a progressive one, as income rises, increasingly higher taxes are imposed. But those in the highest bracket don’t pay the highest rate on all their income. For example, for 2017 taxes, single individuals pay 39.6% only on income above $418,401 (above $470,001 for married filing jointly); the lower tax rates are levied at the income brackets below that amount, as shown in the table below.
https://www.bankrate.com/finance/taxes/tax-brackets.aspx https://www.bankrate.com/finance/taxes/tax-brackets.aspx
- refurb 8y agoThe OP is correct. The addition income you’d earn in SF is taxed at the higher marginal rate. What he is saying is that if you make $100k in Houston and $250k in SF, the extra $150k is tax entirely at the higher rate.
- dragonwriter 8y ago> What he is saying is that if you make $100k in Houston and $250k in SF, the extra $150k is tax entirely at the higher rate. The part above $128K is actually taxed at a lower rate; crossing the Social Security maximum taxed earnings level (and thus losing 6.2% in marginal tax on income) more than makes up for the 5% higher marginal income tax rate.
- skookumchuck 8y agoFrom the linked table, 2018 marginal tax rates are for single: 24% $82,501 to $157,500 32% $157,501 to $200,000 35% $200,001 to $500,000 I.e. 8% to 13%, not 5%.
- ppseafield 8y agoYou're right. I missed the word additional when I read it.