Ever heard someone say, “Don’t take that raise—you’ll just pay more in taxes and end up with less money!”? This myth is surprisingly common and can make people hesitate to celebrate their hard-earned success.
But is there any truth to the idea that a pay raise could actually leave you worse off after taxes?
Let’s break down where this belief comes from and why it simply doesn’t hold up.
Why People Believe It
A lot of the confusion comes from how tax brackets work in the U.S.
People often think that if a raise bumps them into a higher tax bracket, their entire income will be taxed at that higher rate, wiping out the benefit of the raise—or even making them take home less.
For example:
If I get a raise and my salary goes from $95,000 to $105,000, I’ll move from the 22% tax bracket to the 24% bracket. That means all my income will be taxed at 24% instead of 22%, so I’ll actually take home less money even though I’m earning more!
This misunderstanding is widespread and gets repeated by friends, coworkers, and even some ignorant media personalities, fueling the fear that earning more could somehow backfire financially.
The Reality
Here’s the real deal: The U.S. uses a marginal tax system, which means only the portion of your income that falls into a higher bracket gets taxed at the higher rate.
The rest of your income is still taxed at the lower rates for each bracket.
For example, if you get a raise that puts just a small part of your salary into the next tax bracket, only that extra bit is taxed more—not your whole paycheck.
So, a raise always means you take home more money, not less.
No matter how much your income increases, you’ll never lose money because of moving into a higher tax bracket.
Let’s say you have a taxable income of $60,000 in 2025. Here’s how your federal tax is calculated using the marginal rates:
- The first $11,925 is taxed at 10% = $1,192.50
- The amount from $11,926 to $48,475 ($36,550) is taxed at 12% = $4,386
- The amount from $48,476 to $60,000 ($11,525) is taxed at 22% = $2,535.50
So, your total federal tax would be:
- $1,192.50 (10% bracket)
- $4,386 (12% bracket)
- $2,535.50 (22% bracket)
- Totaling $8,114
Only the portion of your income above $48,475 is taxed at 22%—not your entire $60,000. The rest is taxed at the lower rates for each bracket.
The 2025 U.S. Federal Tax Brackets
| Tax Rate | Single | Head of Household | Married Filing Jointly or Qualifying Widow(er) |
Married Filing Separately |
|---|---|---|---|---|
| 10% | $0 to $11,925 | $0 to $17,000 | $0 to $23,850 | $0 to $11,925 |
| 12% | $11,925 to $48,475 | $17,000 to $64,850 | $23,850 to $96,950 | $11,925 to $48,475 |
| 22% | $48,475 to $103,350 | $64,850 to $103,350 | $96,950 to $206,700 | $48,475 to $103,350 |
| 24% | $103,350 to $197,300 | $103,350 to $197,300 | $206,700 to $394,600 | $103,350 to $197,300 |
| 32% | $197,300 to $250,525 | $197,300 to $250,500 | $394,600 to $501,050 | $197,300 to $250,525 |
| 35% | $250,525 to $626,350 | $250,500 to $626,350 | $501,050 to $751,600 | $250,525 to $375,800 |
| 37% | $626,350 or more | $626,350 or more | $751,600 or more | $375,800 or more |
Expert Tip
If you’re offered a raise, don’t let tax myths hold you back.
Use a reliable paycheck calculator or consult a tax professional to see exactly how much more you’ll bring home. Understanding how marginal tax rates work can help you make the most of your income and plan for your financial future.
Bottom Line: Getting a raise is always a win for your wallet. The myth that you could end up with less money after taxes just isn’t true—thanks to the way marginal tax brackets work, more income always means more take-home pay. So, go ahead and celebrate that raise!
