Is a Raise Worth It After Taxes? Hourly Math
A $1 raise adds $80 to a full-time biweekly check, and you keep about $64 of it in 2026. Brackets can't hurt you. Benefit cliffs can. Here's the math.
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Your manager offers you a dollar more an hour. Before you celebrate, a coworker warns you it’ll “just get eaten by taxes” or bump you into a higher bracket.
At 40 hours a week, a $1 raise adds $80 gross to every biweekly check. A single filer in the 12% bracket keeps $64.28 of it before state tax. That’s $6.43 per eight-hour shift and $1,671.28 a year, using 2026 figures.
So is a raise worth it after taxes for hourly workers? Almost always, yes. The rare exception comes from benefits that can shrink or vanish as your pay goes up, such as the EITC, SNAP, Medicaid, and marketplace health subsidies. Tax brackets never cause it.
What a $1 Raise Actually Adds to Each Paycheck (2026)
Every row below assumes a single filer paid biweekly for 80 hours, no state income tax, and a W-4 with no adjustments. Each $1 raise adds $80 gross per check, and Social Security plus Medicare take $6.12 of it (7.65%). Federal tax is the only thing that changes from row to row.
| Raise | Federal tax per check | Net per check | Net per 8-hour shift | Net per year |
|---|---|---|---|---|
| $10 to $11 | $8.00 (10%) | $65.88 | $6.59 | $1,712.88 |
| $15 to $16 | $9.60 (12%) | $64.28 | $6.43 | $1,671.28 |
| $20 to $21 | $9.60 (12%) | $64.28 | $6.43 | $1,671.28 |
| $25 to $26 | $9.60 (12%) | $64.28 | $6.43 | $1,671.28 |
| $31.50 to $32.50 | $13.83 (12% and 22%) | $60.05 | about $6.00 | $1,561.28 |
| $35 to $36 | $17.60 (22%) | $56.28 | $5.63 | $1,463.28 |
Look at the middle of that table. A worker going from $15 to $16 and one going from $25 to $26 keep exactly the same $64.28 per check, and so does someone going from $30 to $31. In 2026, any starting rate from about $13.70 to about $30.97 an hour keeps both the old and new pay inside the 12% bracket for a full-time single filer (the 12% bracket ends at about $31.97 an hour). The percentage shrinks as your rate climbs, though: $1 is a 6.7% raise at $15 and a 3.3% raise at $30.
The formula you can reuse
Your keep rate on raise dollars is:
1 − 7.65% FICA − your federal bracket − your state rate
Before state tax, that’s about 82 cents per extra dollar in the 10% bracket, 80 cents in the 12% bracket, and 70 cents in the 22% bracket. Not sure which bracket you’re in? The effective tax rate calculator shows both your average and marginal rate.
State tax comes off the top too. Pennsylvania’s flat 3.07% takes $2.46 more per check, so $64.28 becomes $61.82 (PA local earned income taxes are extra). In the states with no income tax, the table above is your answer, apart from small employee payroll premiums in a few, such as Washington’s.
Part-time? Scale by hours. At 25 hours a week, a $1 raise is $50 gross per biweekly check, and you keep the same share of it. The pay raise calculator runs your own rate and hours, with a blended tax rate you set.
Does it beat inflation?
The Consumer Price Index for All Urban Consumers (CPI-U) rose 3.7% over the 12 months to September 2026, before seasonal adjustment. A $1 raise is exactly 3.7% at about $27 an hour ($1 ÷ 0.037), so it outpaces that figure below $27 and falls short above it.
Separately, BLS data for the same months show real average hourly earnings fell 0.7%, seasonally adjusted. A raise that only matches prices leaves you treading water.
No, a Raise Can’t Push Your Whole Paycheck Into a Higher Bracket
This is the fear behind most “is it worth it” questions, and the IRS answers it directly: “When your income jumps to a higher tax bracket, you don’t pay the higher rate on your entire income. You pay the higher rate only on the part that’s in the new tax bracket.”
In only one row of the table does a $1 raise cross a line. It’s a single filer going from $31.50 to $32.50 an hour:
- Taxable income rises from $49,420 to $51,500 (after the $16,100 standard deduction).
- The 22% bracket starts at $50,400, so $980 of the raise is taxed at 12% ($117.60) and only $1,100 at 22% ($242.00).
- Federal tax rises $359.60 for the year, and the check still grows by $60.05.
No bracket can turn a raise into a pay cut. We cover the myth in full in is overtime taxed more than regular pay.
A normal raise flows through regular withholding, so the per-check number above lines up with your year-end tax. A retroactive raise paid as a lump sum is different. Your employer may withhold it at the flat 22% supplemental rate, which can look heavy on that one stub. Retro pay vs back pay explains how that settles out.
A Raise vs. Picking Up More Hours
Per dollar, the tax is the same. An extra straight-time hour and a raise dollar both get 7.65% FICA plus your bracket rate. The real difference is your time.
Under 40 hours a week. At $20 an hour, a 30-hour-a-week worker would need 1.5 more hours every week to match a $1 raise. The raise gets there with zero extra hours.
Full-timers. Extra hours are overtime at 1.5×. At a $20 base, about 2.67 overtime hours per biweekly check ($30 each) equals the $80 a $1 raise adds.
Overtime does keep slightly more at filing. The half-time premium is deductible under the federal overtime deduction (up to $12,500 for single and head of household filers, $25,000 for married filing jointly). On those 2.67 hours, the premium is about $26.67 per check, worth roughly $3.20 in the 12% bracket. That saving arrives when you file, not on your stub, because overtime is still withheld normally unless you hand your employer a new W-4 that accounts for it in Step 4(b). The details are in our no tax on overtime deduction guide.
A raise also raises your overtime. Federal law requires covered, non-exempt workers to get overtime “at a rate not less than time and one-half their regular rates of pay.” So a $1 raise adds $1.50 to every overtime hour, and $0.50 of that is deductible premium.
For the full overtime-versus-extra-job math, see second job vs overtime after taxes. To see how many hours a target check takes, try the hours needed for target pay calculator.
Where a Raise Really Can Cost You: Benefit Phase-Outs and Cliffs
Taxes take a fixed slice of each raise dollar. Income-tested benefits work differently. The National Conference of State Legislatures defines the cliff effect as “the sudden and often unexpected decrease in public benefits that can occur with a small increase in earnings.” It adds: “Sometimes the cliff effect looks more like a slope or plateau.”
A slope trims a benefit a few cents per dollar. A cliff ends it at a line. The table below converts each line to a full-time hourly wage (2,080 hours a year):
| Program and household | Limit | Full-time hourly equivalent | Type |
|---|---|---|---|
| EITC phase-out starts (single or HoH, with children) | $23,890 | $11.49 | Slope |
| EITC fully phased out (2 children) | $58,629 | $28.19 | End of slope |
| SNAP gross limit, 1 person (FY2027) | $1,729/month | $9.98 | Cliff in some states |
| SNAP gross limit, 3 people (FY2027) | $2,960/month | $17.08 | Cliff in some states |
| Medicaid expansion, 1 adult (138% of poverty) | about $22,025 | $10.59 | Cliff |
| Medicaid expansion, household of 3 | about $37,702 | $18.13 | Cliff |
| ACA premium tax credit, 1 person, 2026 coverage | $62,600 | $30.10 | Cliff |
| ACA premium tax credit, 1 person, 2027 coverage | $63,840 | $30.69 | Cliff |
EITC: a slope you feel at tax time
For 2026, the earned income credit for single and head of household filers with children starts phasing out at $23,890 ($31,160 for married filing jointly). Above that line, each extra dollar costs 15.98 cents of credit with one child, or 21.06 cents with two or more. With two children it’s gone at $58,629.
Workers without children, if they qualify, get a much smaller credit that phases out between $10,860 and $19,540. A full-time worker at $7.25 an hour is inside that range.
SNAP: a slope, plus a cliff in some states
SNAP benefits fall by 30% of your net income, and net income counts 80% of earnings (after a 20% earned income deduction). That’s about 24 cents less SNAP per extra gross dollar. If you get an excess shelter deduction that isn’t already at its cap, it shrinks as income rises too, so the loss can run higher.
The cliff is the gross income test: 130% of poverty, or $2,960 a month for 3 people for FY2027 (October 1, 2026, through September 30, 2027). But USDA notes that “Most state agencies have adopted broad-based categorical eligibility (BBCE),” which lets them set limits aligned with their TANF-funded programs, so the 130% line may not apply where you live. Households with an elderly or disabled member only have to meet the net income limit.
Medicaid: a true cliff for expansion adults
In expansion states, adults qualify up to 138% of the poverty level. HealthCare.gov adds: “A few states use a different income limit.” According to KFF, 41 states (including DC) have adopted the expansion. Cross the line by a dollar and coverage can end, which is why this one deserves a call to your caseworker before a raise starts.
ACA premium tax credit: the 400% cliff is back
If you buy your own marketplace plan, the subsidy again stops at 400% of the poverty line. Worse, the IRS says “There is no repayment cap for tax years after 2025,” so anyone who ends the year over the line repays every dollar of advance credit.
The credit uses the poverty guidelines published before that year’s open enrollment, so 2026 coverage runs on the 2025 figure ($15,650 for one person). That puts the 2026 line for one person at $62,600. A single worker at $30 an hour full time earns $62,400, just $200 under it. For 2027 coverage it’s $63,840. Check 2027 figures at HealthCare.gov, where open enrollment opens November 1, 2026.
Housing vouchers and child care
HUD says your rent share is “usually 30% of your adjusted monthly income” and “may be as high as 40%” of it. That’s a slope: each extra dollar of adjusted income raises rent by about 30 cents at the usual rate.
Child care subsidies often end at a line. The federal ceiling is 85% of state median income, and states can set lower limits, so check yours.
Worked Example: A Single Parent at $15 to $16
Take a head of household parent with two children under 17, paid biweekly in a state with no income tax. She claims the $4,400 child tax credit in Step 3 of her W-4. Her raise takes her from $15 to $16.
| Line | Per year | Per check |
|---|---|---|
| Gross raise | +$2,080.00 | +$80.00 |
| Social Security and Medicare (7.65%) | −$159.12 | −$6.12 |
| Federal income tax after the child tax credit | $0 change | $0 withheld |
| EITC (21.06% × $2,080) | about −$438 at filing | about −$16.85 |
| Kept before other benefits | +$1,482.83 (71%) | about +$57.03 |
| SNAP slope (about 24 cents per $1) | about −$499 ($41.60 a month) | about −$19.20 |
| Kept with SNAP | about $984 (about 47%) | about +$37.83 |
Why is federal tax flat? Her taxable income rises from $7,050 to $9,130, adding $208 of tax. The nonrefundable part of her child credit absorbs all of it, and the refundable part stays at its $3,400 cap ($1,700 per child).
Her pay stub tells a rosier story: +$73.88 per check, gross minus FICA. The EITC hit shows up only when she files, as a refund about $438 smaller. That gap is why per-paycheck math alone misleads people in the phase-out.
She still comes out ahead, even with SNAP. And at $16 she stays under both cliffs in the table above for a household of 3: the $17.08 SNAP gross limit (where it applies) and the $18.13 Medicaid line (if her state expanded). A raise turns harmful only when it crosses a cliff and the lost benefit is worth more than the raise.
This example leaves out state EITCs and state income tax, which would change the numbers.
How to Check Your Own Raise Before Payday
- Price it per check. Multiply the raise by your hours per check, then apply your keep rate (1 − 7.65% − bracket − state rate). The take-home pay calculator does this from your real pay.
- List every income-tested benefit you get. Write down each one’s limit as an hourly wage, like the table above.
- Within a dollar or two of a cliff? Ask your caseworker how the raise changes your benefits, and when the change starts.
- Look at pre-tax deductions. A 401(k), HSA, or dependent care FSA lowers taxable pay. Some programs count income after these and some don’t. See how pre-tax deductions affect take-home pay.
- Update your W-4 if your credits change. The W-4 withholding calculator shows what each line does.
If you log shifts in ClockWage44, you can enter the new rate as the Entry Hourly Rate on your post-raise days and compare the home screen’s Est. After Taxes week to week. A pay period that straddles the raise shows separate regular-hours rows for each rate in the paycheck editor, with take-home updating live.
The decision rule is short. A raise is worth it unless you’re near a benefit cliff. If you are, price the benefit loss in your own state before you decide. In practice the answer is almost always to take the raise and plan for the benefit change. These are estimates for planning, not tax or benefits advice.
Related Reading
- Pay Raise Calculator. Your new rate and hours turned into weekly, monthly, and yearly gains, with an after-tax estimate at your blended rate
- Is Overtime Taxed More Than Regular Pay?. The bracket myth, explained in full
- Second Job vs Overtime After Taxes. The break-even rate for extra hours
- What Percentage of Your Paycheck Goes to Taxes. Where each dollar of gross pay goes
- FICA Tax Explained. Social Security and Medicare in 2026
- Paycheck Checkup. How much tax should come out of each check
- All free paycheck tools. Calculators for hours, overtime, and take-home pay
References
- IRS: Federal Income Tax Rates and Brackets. How tax brackets apply in layers.
- IRS Rev. Proc. 2025-32. 2026 brackets, standard deduction, EITC thresholds, and the $1,700 refundable child tax credit amount.
- IRS Publication 15-T (2026). Percentage-method withholding tables.
- 26 U.S.C. section 32. EITC credit and phase-out percentages.
- IRS Fact Sheet FS-2026-13. Qualified overtime compensation and withholding.
- DOL Fact Sheet #23: Overtime Pay Requirements of the FLSA. The time-and-a-half rule.
- HHS 2026 Poverty Guidelines. Used for Medicaid and 2027 marketplace limits.
- HHS 2025 Poverty Guidelines Computations. The $15,650 figure used for 2026 marketplace coverage.
- USDA: SNAP FY2027 Income Limits and Allotments. Gross and net monthly income limits.
- USDA: SNAP Eligibility. The 30% benefit formula, earned income deduction, and BBCE.
- HealthCare.gov: Medicaid Expansion and You. The 138% income limit.
- KFF: Status of State Medicaid Expansion Decisions. Which states have expanded.
- IRS: Questions and Answers on the Premium Tax Credit. The 400% limit and repayment rules.
- HUD: Housing Choice Vouchers for Tenants. How your rent share is set.
- NCSL: Introduction to Benefits Cliffs. The cliff effect, SNAP income tests, and child care limits.
- BLS: Consumer Price Index (September 2026 release). 12-month change in prices.
- BLS: Real Earnings (September 2026 release). Inflation-adjusted average hourly earnings.
- Pennsylvania Department of Revenue: Personal Income Tax. The 3.07% flat rate.
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Frequently Asked Questions
How much is a $1 raise per paycheck after taxes?
At 40 hours a week on a biweekly schedule, a $1 raise adds $80 gross to each check. A single filer in the 12% bracket with no state income tax keeps $64.28 of it after 7.65% Social Security and Medicare and 12% federal tax, or about $1,671 a year, using 2026 figures.
Will a raise put me in a higher tax bracket and lower my take-home pay?
No. Only the part of your income above a bracket line is taxed at the higher rate. A single filer going from $31.50 to $32.50 an hour crosses into the 22% bracket in 2026 and still nets $60.05 more per biweekly check.
Is a 50-cent raise worth it?
Yes. At 40 hours a week it adds $40 gross to each biweekly check, and a single filer in the 12% bracket keeps about $32.14 of that before state tax, roughly $836 a year.
Is it better to get a raise or more hours?
Each extra dollar is taxed the same way either way. The difference is time: a raise costs no extra hours, applies to every hour you work from then on, and lifts your overtime rate by 1.5 times the raise. Extra hours make sense when a raise isn't on the table.
Can a raise make me lose food stamps (SNAP)?
While you're under the limits, SNAP falls by about 24 cents for each extra dollar you earn. In states that don't use broad-based categorical eligibility, gross monthly income above 130% of poverty ends eligibility: $2,960 a month for a household of 3 from October 1, 2026. Households with an elderly or disabled member only have to meet the net income limit. Check your own state's rules.
Can a raise make me lose Medicaid?
It can. In the 41 states (including DC) that have expanded Medicaid, adults qualify up to 138% of the poverty level, about $22,025 a year for one person using the 2026 guidelines, though a few states use a different limit. Going over is a cliff, not a slope. If you would then buy your own marketplace plan, the premium tax credit generally covers household incomes from 100% to 400% of poverty, so price that coverage before you decide.
Does a raise reduce my earned income credit?
Yes, if your income is already in the phase-out range. For 2026, single and head of household filers with children lose 15.98 cents (one child) or 21.06 cents (two or more) of the credit for each dollar above $23,890. It shows up as a smaller refund, not on your paycheck.
Should I ever turn down a raise?
Rarely, and never because of tax brackets. The only case is a raise that pushes you over a hard benefit cliff, such as Medicaid or a SNAP gross income limit, where the benefit you lose is worth more than the raise. Ask your benefits office first, since limits vary by state.