taxes, an explanation Show more
So you take home $16,000.
But this year you got a 3% raise. You now make $20,600.
Many people believe that you are now taxed at 25%, so you'd be paying $5,150 in taxes and taking home $15,450 - LESS than before your raise. Mais, non.
You pay 20% on your income up to $20,000, and 25% on your income between $20,000 and $40,000. So you pay the same $4000 on the first $20k, plus $150 on the $600 above $20k. That puts your tax bill at $4150 and your take-home at $16,450.