THE NEW RULES OF RETIREMENT SAVING • 45
Married, Filing Jointly ¹¹ Income
Previous Tax Rate
New Tax Rate
$160,000 $250,000 $500,000
28% 33%
22% 24% 35%
39.6%
No. 2: You make more money: This is a good problem to have. Today, you’re making $60,000 and paying at the 22 percent tax rate. Then you get a promotion and a raise. Now you’re making $85,000 and paying at the 24 percent tax rate. You’re making more money, which is great. But you owe more of it to the government as well. It’s worth remembering that tax rates are not adjusted for in- flation. Many companies give their employees cost-of-living ad- justments. They look at the consumer price index — an average of how much it costs to buy things like groceries, clothes and cars — and try to keep their employees’ purchasing power level through salary increases. Tax rates don’t do that. Your $85,000 will be taxed the same no matter how much (or how little) it can buy for you relative to the past. No. 3: Your deductions are eliminated: Workers like you have lots of tax deductions you can take. Do you have kids? There’s a child tax credit for that. Do you pay interest on your mortgage? You can potentially deduct that, too. But there’s a trend in Washington toward taking away those deductions. Put another way, you could have to pay taxes on a larger part of your income. Call it what you wish, but that’s a tax increase.
¹¹Tax Foundation. August 24, 2023. "Historical U.S. Federal Individual Income Tax Rates & Brackets, 1862-2021" https://taxfoundation.org/data/all/federal/historical- income-tax-rates-brackets/
Made with FlippingBook - Online Brochure Maker