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Taking a large pay reduction also means that you will drop tax bracket(s), which slightly improves your take home pay. You really need to take stock of your spe
by GianFabien 5y ago
Taking a large pay reduction also means that you will drop tax bracket(s), which slightly improves your take home pay. You really need to take stock of your spending. If you don't have much by way of savings, then it would indicate that you are spending most of what you earn. So how are you going to live on less than half the income? You should draw up a realistic budget ahead of time. Once you make the jump, it might be difficult to get back to your earlier higher income.
- bulatb 5y agoIn the US, going up a tax bracket can't under normal circumstances lower your effective pay. The higher rate is only for the income over the floor: if a $1 raise puts you over, only that dollar gets taxed at the new rate. It's possible you'll trigger an alternative tax regime like AMT or meet a benefit cliff, but you'll never make less money after tax just because your income went up.
- willcipriano 5y agoPhrased incorrectly, but I suspect OP means it's deminishing returns on dollars earned after a certain point. You keep a higher percentage of 100k vs 300k.
- deleted 5y ago[deleted]
- Scarblac 5y agoNah, his new 100k will be taxed like the lower 100k of his current income. That's true regardless of how the 200k above that is taxed.