USA Today mistake: There is no tax bracket cliff
In USA Today's original item, one tip said: “That raise actually might not be as good as it looks. The extra money is nice, but it could very well bump you into the next tax bracket, possibly leaving you with less money than you had before the raise.”
Alex and Dean correctly go bonkers. Tax brackets are marginal. If the rate under $50,000 is 10 percent and the rate over $50,000 is 40 percent, it doesn't mean you pay tax of $20,400 if you earn $51,000 -- or 40 percent on all your income. You pay 40 percent only on the amount that's more than $50,000 -- in this case, $1,000. A "cliff" is what fiscal pros call situations in which an extxra bit of income or assets subjects the entire amount to a new rate. Tax cliffs are pretty rare in this country.
Now USA Today has corrected the item, which now says:
A hefty raise might not be as big as it looks. Extra money could bump you into the next tax bracket, which means you’ll pay a higher tax rate on earnings above a certain threshold. Relax: Your earnings below that threshold are still taxed at the previous, lower tax rate.