Tyler? Yep. Looks like you made $180,050 this year. Yep. Do you owe us? $57,626. Oh, no, $10,000 of that was a holiday bonus. Yep, and that bonus bumped you up to the 32% tax bracket. Sucker. Uh, that's not how taxes work. Oh, we know how taxes work. I don't think you do. 32% only applies to my income that is over $170,050. That's how a marginal tax system works. Yeah, I know. Do you? So instead of $57,000, you just owe us $37,000? Well, we haven't even talked about deductions yet, but it looks like this might be all you can handle for one day.

Learn how holiday bonuses affect your tax bracket and how marginal tax systems determine what you owe. A simple breakdown of Tyler's 2023 tax scenario.