> I had a US business professor explain in one of my business classes that making a bit more money might push you over into the next tax bracket and cost you more in taxes than you made.
He's not wrong. You are correct if you consider only income taxes. But there are other tax benefits that lead to discontinuities with respect to income.
As an example, in my state you can deduct up to $5000 of contributions to a 529 plan if your income is under $250K. Go a penny above that threshold, and you can deduct only $2500. That extra penny just reduced your refund by a few hundred dollars.
He's not wrong. You are correct if you consider only income taxes. But there are other tax benefits that lead to discontinuities with respect to income.
As an example, in my state you can deduct up to $5000 of contributions to a 529 plan if your income is under $250K. Go a penny above that threshold, and you can deduct only $2500. That extra penny just reduced your refund by a few hundred dollars.