Tax Bracket Change Estimator
Calculate tax impact of income changes for Head of Household
2025 HOH Tax Brackets
| Taxable Income | Tax Rate | Tax on Bracket |
|---|---|---|
| $0 - $16,550 | 10% | $0 - $1,655 |
| $16,551 - $63,100 | 12% | Up to $5,586 more |
| $63,101 - $100,500 | 22% | Up to $8,228 more |
| $100,501 - $177,200 | 24% | Up to $18,408 more |
| $177,201 - $221,550 | 32% | Up to $14,192 more |
| $221,551 - $623,250 | 35% | Up to $140,595 more |
| Over $623,250 | 37% | 37% on excess |
Key Concept: Marginal vs Effective Rate
Marginal rate = rate on your NEXT dollar of income.
Effective rate = total tax ÷ total income (your average rate).
Moving to higher bracket only affects dollars ABOVE the threshold, not all your income!
Income Change Impact Examples
Example 1: $5,000 Raise (Stay in Same Bracket)
Current: $50,000 salary
• Gross: $50,000
• Standard deduction: -$22,500
• Taxable: $27,500 (12% bracket)
• Federal tax: $3,175
• FICA: $3,825
• Take-home: $43,000
After $5k raise: $55,000 salary
• Taxable: $32,500 (still 12% bracket)
• Federal tax: $3,775 (+$600)
• FICA: $4,208 (+$383)
• Take-home: $47,017
Net gain: $4,017 (80% of raise)
Lost 20% to taxes, kept 80%
Example 2: $10k Raise Crosses Bracket
Current: $80,000 salary (taxable $57.5k, 12% bracket)
• Federal tax: $6,819
• Take-home: ~$65,500
After raise: $90,000 (taxable $67.5k)
• First $63,100: in 12% bracket
• Next $4,400: in 22% bracket ($67.5k - $63.1k)
• Federal tax: $7,787 (+$968 on $10k raise)
• FICA: +$765
Net gain: $8,267 (83% of raise)
Even crossing into 22% bracket, you keep over 80%!
Example 3: Major Jump (New Job)
Old job: $75k → New job: $120k (+$45k)
At $75k:
• Taxable: $52,500
• Federal tax: $6,119
• FICA: $5,738
• Take-home: $63,143
At $120k:
• Taxable: $97,500 (crosses into 24% bracket at $100,501)
• Federal tax: $15,217
• FICA: $9,180
• Take-home: $95,603
Net gain: $32,460 (72% of $45k raise)
Lost 28% to taxes - higher brackets and more FICA
Bracket Change Calculator Tool
Quick Estimate Formula
Take-Home Increase = Raise × (1 - Marginal Tax Rate - 7.65%)
Example: $10k raise, 22% bracket
• Take-home: $10,000 × (1 - 0.22 - 0.0765) = $10,000 × 0.7035 = $7,035
This assumes no state tax. Add state rate if applicable.
| Your Bracket | $5k Raise Net | $10k Raise Net | $20k Raise Net |
|---|---|---|---|
| 10% | $4,118 | $8,235 | $16,470 |
| 12% | $4,018 | $8,035 | $16,070 |
| 22% | $3,518 | $7,035 | $14,070 |
| 24% | $3,418 | $6,835 | $13,670 |
| 32% | $3,018 | $6,035 | $12,070 |
| 35% | $2,868 | $5,735 | $11,470 |
| 37% | $2,768 | $5,535 | $11,070 |
The "Tax Bracket Myth"
Common Misconception:
"If I get a raise that puts me in the next tax bracket, I'll make LESS money overall."
The Truth:
This is COMPLETELY FALSE. You can never make less by earning more. The higher rate only applies to dollars ABOVE the threshold.
Example Debunking the Myth:
• Bracket threshold: $63,100 (12% → 22%)
• Income at $63,100: Tax on bracket = $5,586 (12% bracket)
• Income at $63,101: Tax = $5,586 + $2.20 (22% on $1 over)
You pay 22¢ more tax on the extra $1. You still net 78¢!
Special Bracket Considerations
EITC Phase-Out (Low Income)
Earned Income Tax Credit phases out as income increases. For HOH with 2 kids, credit phases out completely by $57,414.
Effective marginal rate: Can exceed 30% during phase-out range due to credit reduction + regular tax increase. Rare case where more income hurts somewhat.
Child Tax Credit Phase-Out (High Income)
Credit phases out starting at $200k MAGI for HOH. Lose $50 for each $1,000 over threshold.
Example: $210k income loses $500 credit. Effective marginal rate: 24% + 5% (phase-out) = 29% on that $10k.
Social Security Wage Base ($176,100)
Once you hit $176,100 in wages, you STOP paying 6.2% Social Security tax. Your paycheck increases by 6.2% for rest of year!
Effective marginal rate drop: If in 32% bracket and over SS cap, marginal rate drops from 39.65% to 33.45%.
Bonus vs Raise: Tax Impact
| Type | Withholding | Actual Tax | Pros/Cons |
|---|---|---|---|
| $10k Raise | Spread over year, matches bracket | 12-24% (marginal) | Steady income, accurate withholding |
| $10k Bonus | 22% flat rate upfront | 12-24% (same) | One-time, may get refund if over-withheld |
Tax-wise, they're the same! $10k raise = $10k bonus in terms of actual tax owed. Only withholding timing differs.
💡 Bracket Change Planning Tips
1. Always Take the Raise
Never refuse income because of taxes. Even in 37% bracket, you keep 55%+ after all taxes. More money is always more money!
2. Time Large Income Events
If getting big bonus or selling stock, consider spreading across 2 tax years. Can save thousands by avoiding bracket jump.
3. Increase 401(k) Contribution
Got raise? Boost 401(k) to 15-20%. Reduces taxable income AND saves for retirement. Win-win strategy.
4. Itemize If Near Threshold
Higher income = more likely to benefit from itemizing. Review if new income puts you over $22,500 deductions.
5. Update W-4 After Major Change
Big raise or new job? Adjust W-4 to withhold correctly in new bracket. Avoid owing/getting big refund.
6. Consider Roth Conversion in Low Year
Job loss or career change = low income year. Convert traditional IRA to Roth at lower bracket. Smart long-term move.