Raise Reality Check: What a Raise Really Adds
A raise is taxed at your bracket, but it can also shrink your EITC, cost you the ACA premium tax credit or raise your student loan payment. Enter your household and the raise to see what you actually keep, and where your next cliff is.
Loading the 2026 figures…
Nothing you enter is stored or sent. The benchmark premium is the second-lowest-cost silver plan for your household, shown on HealthCare.gov or your state's Marketplace. Children under 17 count for the Child Tax Credit, the EITC and RAP's dependent allowance.
Everything is annual and uses the 2026 federal rules. The tool treats all income as wages and your pre-tax savings as 401(k)-style deferrals, which lower income tax and the income the ACA and RAP look at, but not Social Security and Medicare tax.
How the Raise Reality Check Works
A raise is taxed at your marginal rate, but that rate isn't the whole story. Several benefits shrink as income rises, and a few disappear all at once. The Raise Reality Check runs your household twice, before and after the raise, and adds up every piece that changes:
- Federal income tax, using the 2026 brackets and standard deduction ($16,100 single, $24,150 head of household, $32,200 married filing jointly).
- Social Security and Medicare tax: 6.2% of wages up to $184,500 and 1.45% of all wages, plus 0.9% above $200,000 ($250,000 for joint filers).
- Your state's income tax, if you enter a rate. Most states use brackets, so enter the rate on your top dollars; enter 0 if your state has no income tax.
- The Child Tax Credit: $2,200 per child under 17, up to $1,700 of it refundable, reduced by $50 for each $1,000 of income above $200,000 ($400,000 for joint filers).
- The Earned Income Tax Credit, which phases in with earnings and then phases out.
- The ACA premium tax credit, if you buy Marketplace coverage, including the cliff at 400% of the poverty line.
- Payments under the Repayment Assistance Plan (RAP), if you repay federal student loans on it.
The result is what the raise adds to your spendable income, and your effective marginal rate: the share of the raise lost to taxes and shrinking benefits. It also scans the next $30,000 of pay and tells you where the next cliff is, and if a raise leaves you worse off, how big a raise it would take to come out ahead.
The Benefit Cliffs of 2026
Most of what a raise triggers is a slope: you lose some cents per dollar, and you always keep something. A cliff is different. Cross a line by a dollar and a whole benefit, or a whole step of a payment, changes at once. Three matter most in 2026.
The ACA subsidy cliff
The enhanced premium tax credits of 2021 through 2025 expired on December 31, 2025, and the old rule is back: no credit at all above 400% of the federal poverty line. Just below the line, a household pays 9.96% of income toward the benchmark silver plan and the credit covers the rest. Just above it, the household pays the full premium. Coverage for 2026 uses the 2025 poverty guidelines; coverage for 2027 uses the 2026 guidelines, and the top contribution rises to 10.22%.
| People in your tax household | 2026 coverage (2025 guidelines) | 2027 coverage (2026 guidelines) |
|---|---|---|
| 1 | $62,600 | $63,840 |
| 2 | $84,600 | $86,560 |
| 3 | $106,600 | $109,280 |
| 4 | $128,600 | $132,000 |
| 5 | $150,600 | $154,720 |
| 6 | $172,600 | $177,440 |
Figures are for the 48 contiguous states and DC; Alaska and Hawaii lines are higher, and the calculator handles both. The income that counts is modified adjusted gross income (MAGI): AGI plus tax-exempt interest, untaxed Social Security and excluded foreign income. From 2026 there is also no cap on paying back excess advance credits, so a raise that crosses the line mid-year can mean repaying the whole year's credit at tax time. Our guide to the ACA subsidy cliff covers the rules in detail.
RAP payment steps
The Repayment Assistance Plan, open since July 1, 2026, sets payments as a percentage of your entire AGI: 1% just above $10,000, rising one point for each additional $10,000, up to 10% above $100,000, minus $50 a month for each dependent, with a $10 minimum. Because the percentage applies to every dollar, crossing a $10,000 line raises the payment on all of your income.
| Adjusted gross income | RAP rate | Monthly payment (no dependents) |
|---|---|---|
| $30,000 | 2% | $50.00 |
| $30,001 | 3% | $75.00 |
| $40,000 | 3% | $100.00 |
| $40,001 | 4% | $133.34 |
| $50,000 | 4% | $166.67 |
| $50,001 | 5% | $208.34 |
| $60,000 | 5% | $250.00 |
| $60,001 | 6% | $300.00 |
One dollar of extra AGI at $50,000 raises the payment by about $42 a month, or about $500 a year. Payments are recalculated when you recertify your income, so a raise shows up in your RAP payment after the next recertification rather than immediately.
The EITC phase-out
The Earned Income Tax Credit rises with earnings, holds at its maximum, then shrinks as income rises. It never drops off a cliff, but in the phase-out range it works like an extra tax of up to 21 cents on every dollar.
| Qualifying children | Maximum credit | Phase-out range (single or head of household) | Phase-out range (married filing jointly) | Lost per $1 in the range |
|---|---|---|---|---|
| No children | $664 | $10,860 to $19,540 | $18,140 to $26,820 | 7.65¢ |
| One child | $4,427 | $23,890 to $51,593 | $31,160 to $58,863 | 15.98¢ |
| Two children | $7,316 | $23,890 to $58,629 | $31,160 to $65,899 | 21.06¢ |
| Three or more | $8,231 | $23,890 to $62,974 | $31,160 to $70,244 | 21.06¢ |
The credit also requires earned income, a valid Social Security number and investment income under the annual limit; workers without children must be 25 to 64. The calculator assumes you qualify.
Smaller slopes
The Child Tax Credit phase-out costs $50 for each $1,000 above $200,000 ($400,000 for joint filers). At lower incomes the refundable part of the credit works the other way: it grows by 15 cents per dollar earned above $2,500 until it reaches $1,700 per child. Social Security tax stops at the $184,500 wage base, which lowers the marginal rate on earnings above it, and the extra 0.9% Medicare tax raises it above $200,000.
Three Raises, Three Different Results
These households are illustrative, and the numbers come from the calculator above. Load any of them with the sample buttons.
The Mendozas file jointly, earn $82,000 in wages and buy Marketplace coverage with a benchmark premium of $1,900 a month. One of them gets a $4,000 raise, which takes their MAGI from $82,000 to $86,000, over the $84,600 line for a household of two.
| Item | Before | After | Effect |
|---|---|---|---|
| Household wages | $82,000 | $86,000 | +$4,000 |
| Federal income tax (before credits) | $5,480 | $5,960 | -$480 |
| Social Security and Medicare | $6,273 | $6,579 | -$306 |
| Premium tax credit (ACA) | $14,633 | $0 | -$14,633 |
| What they keep | -$11,419 |
They lose the full premium tax credit, $14,633 a year, and end up $11,419 behind, an effective marginal rate of 385%. They would need a raise of about $18,300 to come out ahead. The cheaper fix: about $1,400 a year more in pre-tax 401(k) or HSA contributions brings MAGI back to the line and keeps a credit of about $14,374.
Dana files as head of household with two children and earns $32,000. A $3,000 raise lands in the EITC phase-out range.
| Item | Before | After | Effect |
|---|---|---|---|
| Household wages | $32,000 | $35,000 | +$3,000 |
| Federal income tax (before credits) | $785 | $1,085 | -$300 |
| Child Tax Credit | $4,185 | $4,400 | +$215 |
| Earned Income Tax Credit | $5,608 | $4,976 | -$632 |
| Social Security and Medicare | $2,448 | $2,678 | -$230 |
| What they keep | +$2,054 |
The EITC shrinks by $632, federal income tax before credits rises $300 and payroll taxes $230, while the Child Tax Credit grows by $215 because more of it can offset tax. Dana keeps $2,054, about 68% of the raise: a real gain, but an effective marginal rate of 32%, three times the 10% bracket Dana's taxable income falls in.
Sam is single, earns $49,000 and repays federal student loans on RAP. A $2,000 raise pushes AGI from $49,000 to $51,000, across the $50,000 line.
| Item | Before | After | Effect |
|---|---|---|---|
| Household wages | $49,000 | $51,000 | +$2,000 |
| Federal income tax (before credits) | $3,700 | $3,940 | -$240 |
| Social Security and Medicare | $3,748 | $3,902 | -$153 |
| RAP student loan payments | $1,960 | $2,550 | -$590 |
| What they keep | +$1,017 |
Sam's RAP rate moves from 4% to 5% of all AGI, so yearly payments rise $590, from $1,960 to $2,550. Sam still keeps $1,017, but the effective marginal rate on the raise is 49%.
What to Do When a Raise Hits a Cliff
Turning down a raise is almost never the answer. Most raises leave you better off, and the ones that don't can usually be fixed.
- Use pre-tax savings to stay under a line. Traditional 401(k), 403(b) and 457 deferrals and HSA contributions lower AGI and MAGI. For a household near the ACA cliff, a modest increase can protect a five-figure credit.
- Tell the Marketplace about the raise. Advance credits are based on your estimate. With no repayment cap from 2026, updating your income as soon as it changes avoids a large bill in April.
- Time what you can. A bonus paid in January instead of December, or a Roth conversion moved to a lower-income year, can keep one year under a line.
- Negotiate past the cliff. If a raise would leave you worse off, the break-even figure shows how much more you'd need. Sometimes the answer is a bigger raise, not a smaller one.
- Plan the RAP recertification. A higher payment starts when your new income is used, so budget for it before the next recertification.
What the Calculator Leaves Out
It covers the federal pieces that apply nationwide and treats your state as a single rate. It does not model Medicaid or CHIP (in states that expanded Medicaid, most adults qualify below 138% of the poverty line), SNAP, housing assistance, child care subsidies, state tax credits or the Social Security earnings test. It assumes all income is wages; self-employment tax, capital gains and Social Security benefits change the math. Two earners each pay Social Security tax up to the wage base, which the tool does not split. The ACA credit follows the IRS sliding scale rounded to 0.01%; Form 8962's table can differ by a few dollars, and the credit can't exceed the premium of the plan you choose. For a full paycheck model, use the Paycheck Optimizer.