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birdsaflutter t1_j9dhc0q wrote

Absolutely agree, I found out about the same issue a few years ago when I did my taxes manually to double check Turbo Tax. I was shocked to find that I fell right in the “recapture” zone. I don’t remember exactly, but I thought that the “slide up” from NY state in that zone, combined with city and federal taxes, meant that I took home less money than if I was just below the zone threshold. I called the tax department in disbelief, they agreed that I had it right. Unbelievable! I tried to find articles about it online, nothing. I even wrote to The NY Times personal finance section requesting they do an article on it, they didn’t.

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PostPostMinimalist OP t1_j9dk37t wrote

>meant that I took home less money than if I was just below the zone threshold

I don't believe it works this way. Basically at the top of the zone, you pay marginal rate on every dollar. One dollar above, what you pay is the 'table' calculation plus the recapture base amount. This recapture base amount is precisely the difference between your current marginal rate and the previous one times the amount where the new bracket starts, IE it's calculated so that these numbers are the same. Then you add on top of that (incremental benefit) based on a ratio of X/50,000 where X is your amount in the new bracket, so it starts at 0.

Took me a few tries to wrap my brain around it....

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Frisco_Danconia t1_j9f2iln wrote

I had a similar issue last year and did the math multiple times because I just refused to believe it, but there is a zone in which you actually take home less if you earned more and I fell into it. Admittedly, I may have fucked up the math but I don’t think so.

I hate our tax system so much. It’s not at all surprising that high earners are moving to Florida and elsewhere.

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