Quote Originally Posted by JustSteve View Post
It really fucking sucks when you just get into a higher tax bracket and end up paying more in taxes so that your take home pay is actually less than what you would have made had you been in the next bracket down.

Wife is a realtor, so self employed. The trick we learned to use is to hold all checks, if you can afford to, that come in late in the year(mid november/december) and deposit them in the new year so they are not calculated into that tax year. Can help keep you in a lower tax bracket if you are right on the verge.
You'll find that being in a higher tax bracket doesn't really change your effective interest rate. As you make more, you'll pay more $ but also more as a percentage. Jumping to the next bracket doesn't cause a sudden jump in your effective rate. For example, if you make $75k, you'll pay about 19.57% effective rate in taxes. If you make 95k, your effective rate will be 20.94%. Yes, you're in a higher bracket, but there's also a 20k difference in income. So yes, progressive taxation sucks, but think of it as a continuum.

Consider this - $87,849 (right below the 25%/28% bracket cutoff) - effective rate of 20.37%. $87,851 (right above the cutoff) - 20.37%. No difference. You'll pay $1 more dollar in taxes. It also stands to reason that the more you make, the more deductions you typically have, and thus those will lower your effective rate even more.