I’ll also point out that my post may not be completely correct. I’m trying to interpret what seems (to me) to be a very confusing description of this “hidden bracket.” LOL.
Yup, and I’m sure they write it to be confusing and allow gray areas they can slip through themselves.
But it sounds like yes, from $1M to $1.2M, you will be “taxed” at a rate of 45%. But, your cumulative tax rate over all income at that point is still less. Ultimately, it’s not really a separate tax bracket, it’s simply a $12k drop from where in your income you start paying taxes.