4 ms·
No, that's not how it works. It is a marginal tax bracket. If you get in the higher bracket, it's only the new money that gets taxed at the higher rate, not you
by jeromegv 7y ago
No, that's not how it works. It is a marginal tax bracket. If you get in the higher bracket, it's only the new money that gets taxed at the higher rate, not your full salary.
It has absolutely nothing to do with your contribution to retirement accounts. You can invest more and contribute more to your tax free retirement accounts with a higher salary (up to a point) but even if you didn't, that wouldn't make a difference.
- rchaud 7y agoI'm aware of how marginal tax rates are applied. That's why I said "while my average tax rate may increase" (in a hypothetical situation), I can still net more overall due to increase in the absolute $ return on the TFSA portfolio. I'm responding with respect to the OP's comment about beign bumped into a higher marginal tax bracket. Just because you are, doesn't mean you'll automatically end up with less discretionary income.
- brailsafe 7y agoI feel like I'm misreading this, but regardless of whatever investments you have, you'd come out with more as your income increases into higher marginal tax brackets correct? As in, if I was making 94k and got a raise to 98k, I'd come out with more regardless of what's in my TFSA.
- anon73044 7y agoI thought the point of contributing more to the tax free account was to lower the total taxable income? Same with making charitable contributions.