Understanding Tax Brackets For Better Planning

Tech Sales pro making $200k came to me this April. They were blindsided by a $12k tax bill... All because of RSUs & terrible withholding. Here's what happened: This Account Executive at a SaaS company had $120k worth of RSUs vest last year. His company withheld at 22% (The standard rate). But here's the problem - He was already in the 32% tax bracket from his Base + Commissions. That 10% difference? $12,000 he owed just from the RSUs. - Ouch. This happens way more than you think in tech sales. Your RSUs get treated as regular income when they vest. So if you're already earning $200k+ from base & commissions... Those RSUs are getting taxed at your highest rate, not the 22% your company withholds. The math is brutal: -$120k RSUs vesting -Company withholds $26,400 (22%) -You actually owe $38,400 (32%) -Surprise tax bill: $12,000 Here's how to avoid this mess: 1 - Know your tax bracket & have extra withheld from RSUs 2 - Work with a CPA & CFP who understand Equity Comp 3 - Set aside cash for taxes if needed Don't get caught off guard like this guy did. Plan ahead & keep more of what you earn.

Most people — including many CPAs and financial advisors — don’t fully understand how the long-term capital gains brackets actually work. Why? Because the calculations are complicated, and tax software does the math behind the scenes. 👉 Example: Married filing jointly, $70,000 ordinary income + $30,000 long-term capital gains • Your total taxable income is $100,000. • The 15% bracket is technically breached… • But here’s the surprise: most of your capital gains are still taxed at 0%. How it breaks down: • $24,050 of the gain at 0% • $5,950 of the gain at 15% ✅ Translation: Just because you cross into the 15% bracket doesn’t mean all of your capital gains jump to 15%. The IRS stacks your ordinary income first, and only the portion of gains above the threshold gets taxed higher. Tax planning often lives in these small nuances. Getting it right can save thousands.

Your tax rate isn’t just one number. It’s a tool you can use to save big this year. Understanding the difference between your marginal and effective tax rates can help you make smarter money moves. Here’s how: Marginal Tax Rate ➡️ The rate applied to your next dollar earned. ➡️ This is the highest bracket you hit. Example: If you’re in the 24% tax bracket, every extra dollar you earn (like bonuses or freelance income) gets taxed at 24%. Effective Tax Rate ➡️ The average rate you pay on your total income. ➡️ Calculated after applying deductions, credits, and lower brackets. Example: If you make $100k but your average rate after deductions is 18%, that’s the actual percentage of your total income that goes to taxes. Knowing these rates helps you: 1. Plan smarter: → See the tax impact of raises, bonuses, or selling investments *before* making a move. 2. Avoid surprises: → Be prepared for the taxes on extra income, like freelance work or side hustles. 3. Save more strategically: → Use deductions and credits to lower your effective rate and keep more of your money. Taxes aren’t just something to deal with in April. They’re a key part of your year-round financial strategy. If this feels overwhelming, I’ve got you. DM me ‘taxes’ to learn how we can use your numbers to grow and protect your wealth this year. Because your tax rate shouldn’t just be a number. It should work for you.

I used to think tax brackets were just a simple chart to check once a year. But I was wrong. Your tax bracket isn't just a number on a table. It's a strategic tool most advisors overlook. Understanding where your client sits in their bracket helps you: - Time income effectively. - Optimize capital gains decisions. - Maximize retirement contribution strategies. - Avoid unnecessary tax bumps. When I started proactively managing brackets for my clients, their savings multiplied. And they noticed immediately. If you're treating brackets as passive reference points, you're missing out. Shift your thinking—treat tax brackets as active planning levers. You'll add immediate, tangible value your clients will truly appreciate. Ready to make that shift? Let’s talk.