Just wondering when looking at jobs putting me into higher tax brackets, if tax was say 20% for earning £30k, and £31k a year was taxed at 25%, would my first 30k of income be taxed at the 20% or my full salary taxed at 25%? And if so then how do you ever make jumping up to the next tax band viable?
In: Economics
It’s the first one – your first 30,000 is taxed at the first tax bracket, that extra 1,000 you made is taxed as part of the second tax bracket.
Even if it were the other way, where you just get charged a flat percentage based on your total earnings, it’s still better to earn 50k and pay 25% on that than it is to earn 30k and pay 20% on that. But that’s not how progressive tax brackets work.
edit: That’s ignoring standard tax deductions and stuff, looks like lollersauce914 gave an even more precise answer factoring that in.
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