17-02-2022, 12:16 PM
(17-02-2022, 11:54 AM)king1 Wrote: wasn't there talk a year or two back about adjusting the tax brackets to match wage inflation? not sure who it was...That's right.   The higher tax rate is applied only to the portion of income that exceeds the margin.   It's dismaying to see how many people, including journalists, don't understand marginal tax rates.
I know a couple who declined pay increases for a long while (in favour of perks) because they would end up losing on the deal.  But I think that was more so because they would lose family support payments.
I can't see how you could lose money from the payrise just because you hit a higher tax bracket - you only get taxed at the higher rate for income over the respective tax brackets threshold, everything below that threshold is taxed at the lower rate of the lower tax bracket
Only situation I can envisage where someone might have an overall loss after an income boost is if they were receiving income-tested benefits such as the accommodation supplement.  It would be pretty rare and the recipient would have been on a very low income.