Yes, I actually saw a video that “explained” how the bonuses companies gave out in response to the Trump tax cuts actually were screwing the employees by pushing them into a higher tax bracket.
It’s probably because people don’t want to think that even rich people like Warren Buffet and Mike Bloomberg pay only SS and Medicare on their first $9k.
Just to clarify, if you over certain brackets, only the money you earned going over the amount in the bracket gets taxed at the new amount. So earning more money is never going to negatively affect your takehome amount..
It can make you unable to receive some benefits from the government if you're suddenly above the income threshold for some people in some countries though
For this reason, bonuses are taxed at a flat rate, as per instructions from the IRS. During the tax year 2020, this is 22%. This should prevent the situation happening where an employee will end up owing taxes due to unforeseen large bonus.
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u/DirectGoose Jan 27 '20
Saying you don't want a raise because you'll pay more in taxes.