Will a raise push me into a higher tax bracket?

It might push some of your income into the next bracket, but only the dollars in that new bracket are taxed at the higher rate. Your existing income stays at the same rates. Thanks to the progressive system, you always take home more money after a raise.

How much of a $5,000 raise do I actually keep?

It depends on your marginal tax rate and state. In the 22% federal bracket with no state tax, you keep about $3,518 after federal income tax and FICA ($5,000 - $1,100 federal - $310 SS - $72.50 Medicare). In California at the same bracket, you keep about $3,200.

How Are Raises Taxed?

Salary & Compensation3 min read·Updated for 2025

Quick Answer

A raise is taxed at your marginal tax rate — the rate on your highest dollars of income. Only the raise itself is taxed at the potentially higher rate; your existing income stays taxed at the same rates as before. A raise always results in more take-home pay, never less. The myth that "a raise can cost you money" is the most persistent tax misconception in America.

How the Math Works

Under the U.S. progressive tax system, income is taxed in layers. When you get a raise, only the additional dollars face taxation — and they start at whatever bracket your current income ends in.

Real Example With Actual Numbers

Jessica earns $90,000 in Florida (single, standard deduction). Her taxable income is $75,000. She gets a $10,000 raise to $100,000.

Before the Raise ($90,000)

Bracket	Income	Tax
10%	$11,925	$1,192.50
12%	$36,550	$4,386.00
22%	$26,525	$5,835.50
Total	$75,000	$11,414.00

After the Raise ($100,000)

Bracket	Income	Tax
10%	$11,925	$1,192.50
12%	$36,550	$4,386.00
22%	$36,525	$8,035.50
Total	$85,000	$13,614.00

What Jessica Keeps From the Raise

Tax on the $10,000 raise	Amount
Federal income tax (22%)	$2,200
Social Security (6.2%)	$620
Medicare (1.45%)	$145
Total tax on raise	$2,965
Jessica keeps	$7,035

Jessica keeps 70.4% of her raise. The existing $90,000 in salary is taxed exactly the same as before. Her take-home increases from about $70,600 to $77,635. She is unambiguously better off.

Run your own raise scenario at the SalaryHog calculator.

What If the Raise Pushes You Into a New Bracket?

Even crossing into a new bracket is not a problem. Suppose Jessica's raise was $20,000 instead, pushing her taxable income from $75,000 into the 24% bracket (which starts at $103,351 for single filers in 2025):

$28,350 of the raise ($103,350 - $75,000) taxed at 22% = $6,237
$1,650 of the raise ($105,000 - $103,350) taxed at 24% = $396
Total extra tax: $6,633

Jessica keeps $13,367 of the $20,000 raise. Only the last $1,650 is taxed at the higher 24% rate — the rest stays at 22%.

After-Tax Value of Common Raises

Assuming 22% federal bracket, 6.2% SS, 1.45% Medicare, no state tax:

Raise Amount	Total Tax on Raise	You Keep	You Keep (%)
$3,000	$890	$2,110	70.3%
$5,000	$1,483	$3,517	70.3%
$10,000	$2,965	$7,035	70.4%
$15,000	$4,448	$10,552	70.3%
$20,000	$5,930	$14,070	70.4%

In a state with income tax, you keep less. In California (9.3% state bracket), a $10,000 raise would net about $6,105 (61.1%). In Texas or Florida, you keep the full $7,035.

What to Do After a Raise

Increase retirement contributions: Funnel part of the raise into your 401(k) — you get the tax benefit and build wealth
Check your withholding: Your employer should automatically adjust withholding, but verify on your pay stub
Consider an HSA: If eligible, increasing HSA contributions reduces your taxable income
Avoid lifestyle inflation: Try to save at least half of every raise

Use the SalaryHog calculator to compare your take-home pay before and after the raise, and negotiate confidently knowing that every raise makes you better off.