“I don’t want the raise, it’ll push me into the next bracket.” It is one of the most repeated sentences in American workplaces and it is wrong in a specific, fixable way. This guide separates the two rates people conflate, shows the actual numbers at four salaries, and explains the one situation where the fear has a grain of truth.
Marginal rate: the tax on your next dollar
The U.S. federal income tax is progressive in the literal sense: income is sliced into layers and each layer is taxed at its own rate. For a single filer in 2026, after the $16,100 standard deduction, the first $12,400 of taxable income is taxed at 10%, the next slice up to $50,400 at 12%, up to $105,700 at 22%, up to $201,775 at 24%, and so on to 37% above $640,600.
Your marginal rate is the rate on the top slice — the rate that applies to one more dollar. Someone with $148,900 of taxable income (a $165,000 salary) has a 24% marginal rate. That number matters for decisions: it is what a raise is taxed at, what a 401(k) contribution saves, what a bonus effectively costs.
Effective rate: the tax on all your dollars
Your effective rate is total tax divided by gross income. The $165,000 earner pays $28,334 of federal income tax, which is 17.2% of gross — not 24%, because most of the income was taxed in the lower slices. Add FICA and the effective federal-plus-FICA rate is 24.8%. Add New York State and City and it is 33.9%. The effective rate is the honest description of your tax burden; the marginal rate is the honest description of your incentives.
The numbers at four salaries
| Salary | Federal marginal | Federal effective | Total effective (Austin) | Total effective (NYC) |
|---|---|---|---|---|
| $60,000 | 12% | 8.4% | 16.0% | 24.0% |
| $100,000 | 22% | 13.2% | 20.8% | 29.5% |
| $165,000 | 24% | 17.2% | 24.8% | 33.9% |
| $250,000 | 32% | 20.5% | 26.7% | 36.2% |
Two patterns are worth noticing. First, the effective rate is always well below the marginal rate, and the gap is widest in the middle of the range. Second, the location layer adds roughly nine points of effective rate in New York City at every salary — the state and city schedules are progressive too, but flatter than the federal one.
Why a raise never leaves you worse off
Crossing into a higher bracket taxes only the dollars above the threshold at the higher rate. A $105,000 salary has $88,900 of taxable income, all in the 22% bracket or below. A $110,000 salary has $93,900 of taxable income, still entirely below the $105,700 line. A $125,000 salary crosses it — and pays 24% on the $3,200 above the line, 22% on everything below it exactly as before. The dollars you already had are not re-taxed. There is no salary at which earning more results in taking home less, under the income tax alone.
The grain of truth: cliffs outside the income tax
The fear is not entirely baseless, because a few things in the system are cliffs rather than slopes. The Additional Medicare tax starts at $200,000 (0.9% on wages above it — a slope, not a cliff, but a new one). Income-tested benefits — premium tax credits for health insurance, student loan repayment plans, some state programs — can drop sharply at a threshold, and there a raise can cost more than it pays. Roth IRA eligibility phases out above $150,000 for single filers. None of these is the income tax bracket, but they are why the instinct exists.
The combined marginal rate
For decisions, the figure to know is your combined marginal rate: federal plus state plus, if you are under the wage base, FICA. Every audit page prints it (city taxes add a further 1 to 3.9 points in the nine cities that levy one). At $100,000 it is 29.65% in Austin and 35.55% in New York City; at $165,000 — still under the $184,500 Social Security wage base, so FICA is included — it is 31.65% and 37.55%. That is what a $1,000 raise is taxed at, and what a $1,000 401(k) contribution saves. Everything else is accounting.
Audits cited in this guide
Open the full paycheck breakdowns
About the figures in this guide
Every dollar amount above is produced by the same deterministic tax engine that generates the audit pages, using the published 2026 federal brackets and standard deduction, the 2026 Social Security wage base, each state's published schedule and each city's local tax rules. Assumptions: single filer, standard deduction, no dependents, no itemized deductions. Rent figures are median 1-bedroom asking rents refreshed quarterly. Read the methodology, or send a correction with a primary source.