Luis Analyzes Tax Effects of a Raise, Meets with Emily, Defines Mission
The first thing I did after hanging up was to Google IRS tax brackets. We were currently in the 25 percent tax bracket, and it was easy to calculate that $1,000 extra income on our last tax return would increase federal tax by $250. A large raise might even bring us to the 33 percent bracket. The California withholding schedules demanded 9.3 percent, which calculated to another $93 lost. California also took another tax deduction of 1 percent, called SDI, which, I learned, was for a disability insurance program.
My last paycheck also showed deductions for Social Security and Medicare. Another quick Google search revealed that deduction was 7.65 percent out of ...
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