How Tax Brackets Actually Work: The Progressive Tax System Explained

Most people think that crossing into a higher tax bracket means all their income gets taxed at the new rate. That is not how it works, and in this episode Ryan explains exactly why. Using a bucket analogy, he shows how only the dollars above each threshold get taxed at the higher rate. Getting a raise never lowers your take-home pay, even if it bumps you into the next bracket.Ryan walks through the federal tax brackets for married filers and shows the real math on a couple earning $100,000. Aaron describes the moment he read this in Ryan's book, woke up his wife, and said "did you know this?" which tells you everything about how eye-opening this episode is. If you have ever been confused or worried about moving up a tax bracket, this one is worth your time.Find "Your Fiscal Physical" the book on AmazonIf you have suggestions or feedback, please email us at: [email protected], as always, Stay the Course!