This isn't completely accurate. When you make more the calculations assume you moved up a pay bracket as if you would always make that much on a paycheck and withhold a higher percentage. You tax liability will remain the same and you will likely get a larger refund at the end of the year because that assumption meant they took too much out in taxes.
I was wondering if I was losing my mind or if everyone on here had suddenly gotten reddit hivemind disease. Good to see the ot is taxed higher people are wrong.
Yea the amount you actually pay in taxes is based on your yearly earnings, has nothing to do with individual paychecks. Most companies use formulas or software that does it automatically to figure out how much you should be paying in taxes based on the amount of the check as if thats how much you got on each paycheck. If you know that you will be working a lot of overtime, you can fill out a new W-4 (i think that's the right form) to lower your tax dependencies so that you can remain taxed at the correct rate, just don't do it for too much of the year or you will end up owing when you file your taxes. If you leave it alone and work a bunch of overtime, you will receive a tax refund.
This isn't completely accurate. When you make more the calculations assume you moved up a pay bracket as if you would always make that much on a paycheck and withhold a higher percentage. You tax liability will remain the same and you will likely get a larger refund at the end of the year because that assumption meant they took too much out in taxes.
I was wondering if I was losing my mind or if everyone on here had suddenly gotten reddit hivemind disease. Good to see the ot is taxed higher people are wrong.
Yea the amount you actually pay in taxes is based on your yearly earnings, has nothing to do with individual paychecks. Most companies use formulas or software that does it automatically to figure out how much you should be paying in taxes based on the amount of the check as if thats how much you got on each paycheck. If you know that you will be working a lot of overtime, you can fill out a new W-4 (i think that's the right form) to lower your tax dependencies so that you can remain taxed at the correct rate, just don't do it for too much of the year or you will end up owing when you file your taxes. If you leave it alone and work a bunch of overtime, you will receive a tax refund.
Correct
It should also be pointed out that the way tax brackets are calculated changed in the Tax bill.
The previous tax code used the CPI-U measure to adjust the brackets, while the new code uses the C-CPI-U measure.
This rises slower, so as you get pay rises you're going to get into the next bracket sooner.
https://fredblog.stlouisfed.org/2018/01/new-tax-code-new-price-index-new-tax-bracket-adjustments/
And a video about it
https://youtu.be/RA8PX_T1Suw