A Reddit post recently blew up after one user shared a story about their friend who refused a $5,000 raise. Why? Because they thought it would push them into a higher tax bracket and actually make them take home less money.

A Misunderstanding That Went Viral

The post, shared in r/mildlyinfuriating, included a text conversation where the friend said, "30% to 37%. So if I take it, I move into the next tax bracket and my overall income will decrease."

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The Redditor tried to explain how taxes actually work, by explaining that "ONLY the amount you earn over the threshold is taxed at 37%." Still, the friend wasn't convinced, responding, "Yes, ONLY the amount I earn over the threshold is taxed at 37%, but since 37>30, my next income goes DOWN."

Frustrated, the Redditor pointed out the mistake, but the friend refused to accept it, replying, "Lmao, you are dumber than rocks bro." The exchange sparked a wave of reactions from Reddit users, with many expressing disbelief at how widespread this misconception still is.

One commenter summed it up: "That's the thing with dumb people, they don't think they are dumb. It's the smart people who realize how much they don't know." Another added, "How do people this dumb end up in the 37% tax bracket? That is the real question."

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Several users shared similar encounters with people who misunderstood tax brackets. One person recounted how a carpenter they knew refused to earn over a certain amount for years because he thought it would lower his income. Another shared a baffling experience: "A manager at my old job told my coworker not to push for a raise because ‘you'll go up a tax bracket and be making less overall.'” They showed her the actual numbers, and she still insisted they were wrong.

Many users debated why this misunderstanding persists. Some blamed poor financial education, while others pointed out that misinformation spreads easily. One user wrote, "As a kid, I always heard adults saying they didn't want to get into the next tax bracket. So, the only natural conclusion I could come to as a kid was that the tax bracket rate was on all monies. I assume many people grew up hearing the same nonsense."

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Some speculated that this kind of financial illiteracy benefits employers, with one commenter joking, "His boss is probably thinking about firing him because he's so stupid," while another countered, "His boss loves him because he's dumb enough to keep working for the same salary."

Understanding marginal tax brackets isn't actually complicated. If you make just enough to enter a new tax bracket, only the portion above the threshold is taxed at the higher rate. The rest of your income is still taxed at the lower rates. For example, if you make $100,000 and the next bracket starts at $101,000, only that extra $1,000 gets taxed at the higher rate. You're still walking away with more money.

This viral thread highlights a widespread issue: many people don't understand how taxes work, even when it directly affects their income. And when misinformation meets stubbornness, the results can be both frustrating and amusing. As one commenter put it, "If you choose to receive nothing, that's like taking a 100% tax on the money you didn't receive."

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This article 'His Boss Loves Him'—A Redditor's Friend Refused A $5K Raise, Convinced It Would Mean Less Money After Taxes originally appeared on Benzinga.com

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