Week 2 | The Missing Chapter | March 2026
There’s a moment, different for everyone, when the income jumps in a meaningful way. A promotion, a new offer, equity starting to vest. The number on the paycheck changed. And at some point after that, maybe right away or maybe months later, a quiet question appears: am I actually making the most of this?
Not a crisis. Not a specific mistake you know you made. Just a feeling. The sense that somewhere in the new territory, there might be more opportunity than you’re currently reaching.
That feeling is worth following. This week, let’s try to unpack what’s actually underneath it.
There’s a version of this you see all the time, the one that tells you crossing a new income threshold changes everything, that what worked before won’t work anymore, that you need a new plan immediately. Financial advisors love that framing. It creates urgency, it implies things are broken, and it positions the advisor as the fix.
I don’t think it’s honest. And I think it’s exactly the kind of thing that makes people lose faith in this industry.
Nothing that was working before stopped working because your income went up. Your savings instincts are still right. The 401k contribution you’ve been making is still a good idea. The fundamentals that got you here are still sound. What changed is your capacity to pursue the goals you already have.
And that’s worth sitting with for a moment. This isn’t lottery money. It’s not a life-changing lump sum that solves everything at once. It’s something more interesting than that: a meaningful increment, enough that if you direct it well, things could look genuinely different down the road.
Maybe that means retiring a year or two earlier than you thought. Maybe it’s hitting the college savings target before your oldest starts high school. Maybe it’s the European trip your family has been talking about for three years, actually funded. Maybe it’s paying off student loans eighteen months ahead of schedule.
The thing is, the extra dollars don’t cover all of it. There’s a real scarcity here, even at a strong income. You can’t do everything at once, which is exactly what creates that pause, that quiet question about where the next dollar actually belongs. That instinct is the right one. The honest answer is that there isn’t one universally correct place for that dollar. It depends on what you’re actually trying to build. What most people are missing isn’t the answer. It’s a framework for thinking through the tradeoffs clearly enough to decide.
First, a misconception worth clearing up
I don’t want the raise. It’ll push me into a higher bracket and I’ll actually take home less.
It makes sense as a fear. When people say “you’re in the 24% bracket,” it sounds like all your income gets taxed at that rate. It doesn’t. Each bracket applies only to the slice of income that falls within it. When your income crosses a threshold, only the dollars above that line get taxed at the higher rate. A raise always puts more money in your pocket.
The 2025 brackets for married filing jointly make this concrete:
| Income Range | Rate |
| Up to $23,200 | 10% |
| $23,200 – $94,300 | 12% |
| $94,300 – $201,050 | 22% |
| $201,050 – $383,900 | 24% |
| $383,900+ | 32% |
(2025 MFJ thresholds; adjust annually for inflation)
Take a married couple earning $215,000. Their top dollars land in the 24% bracket. But here’s what they actually owe in federal income tax, setting aside deductions and credits to keep the math simple:
| Income Range | Rate | Tax |
| $0 – $23,200 | 10% | $2,320 |
| $23,200 – $94,300 | 12% | $8,532 |
| $94,300 – $201,050 | 22% | $23,485 |
| $201,050 – $215,000 | 24% | $3,348 |
| Total | $37,685 |
$37,685 ÷ $215,000 = 17.5% effective federal tax rate, not 24%.
The 24% is their marginal rate, what the next dollar earned gets taxed at. It’s a useful number for planning decisions, and we’ll come back to it. But it’s not what they pay on everything.
The landscape looks different up here, and that’s a good thing
With a higher income comes a different set of tax code interactions. Some things that were available before work differently now. Some new options open up that weren’t accessible before. None of this is bad news. It’s just new terrain worth knowing.
Some benefits phase out. The tax code includes several deductions and credits that quietly reduce or disappear as income rises, and nobody sends you a letter when it happens. The Roth IRA direct contribution phases out between $242,000–$252,000 of modified AGI for married filing jointly in 2026, and $153,000–$168,000 for single filers. The student loan interest deduction fades. Traditional IRA deductibility phases out if you’re covered by a workplace retirement plan.
The Roth phaseout is worth pausing on specifically, because most people at this income level have absorbed some version of the conventional wisdom: Roth money is valuable, let it grow tax-free as long as possible, draw it last in retirement. That intuition is sound. Having after-tax money gives you flexibility in retirement to manage your taxable income year by year, pulling from whichever account is most efficient at any given moment rather than being forced into one. Roth accounts also don’t carry required minimum distributions, which means you’re not forced to take taxable income you don’t need. The rules of thumb you’ve heard are pointing at something real.
What the phaseout changes isn’t the value of that strategy. It’s the path to keep building it. A lot of people cross the income threshold, stop contributing directly, and assume the strategy is just closed to them. It isn’t. There are legal ways to continue building Roth money at any income level. But you have to know to look for them, and that’s exactly the kind of thing that doesn’t come up unless someone is looking at your full picture. We’ll cover the mechanics later in the series.
The student loan interest deduction fading is a smaller but related point: it quietly changes the real after-tax cost of that debt. Worth knowing if you’ve been doing the math on whether to pay it down or invest.
Your marginal rate makes tax-advantaged space more valuable, not less. Every dollar you shelter from taxes is now shielded at a higher rate than it was before. The 401k contribution you were already making? Worth more now. The HSA you may not be fully using? Worth more now. Higher income doesn’t make tax strategy harder. It makes doing it well more rewarding.
Benefits worth a fresh look
Here’s something that happens with nearly every client who’s had a meaningful income jump: they enrolled in benefits two or three years ago, probably during a hectic first week at a new job, and haven’t looked since. Forty-five minutes, a benefits portal, and a handful of decisions made without much context.
These decisions are worth revisiting, not because the old ones were wrong, but because some of them look different now than they did when you first made them.
Your 401k contribution type. Traditional or Roth: this becomes a genuinely interesting question in a way it may not have been before. Traditional contributions lower your taxable income today but create a tax obligation in retirement. Roth contributions come out of after-tax dollars but grow and withdraw tax-free. Which is right depends on where you expect your income to be later and on your overall account architecture. We’ll build that framework out later in the series. For now, it’s a decision worth making deliberately rather than by default.
The contribution limit itself. The 401k employee contribution limit in 2026 is $24,500, up from $23,500 last year. At a higher marginal rate, every dollar of that space shelters more in tax savings than it did before. It’s the same limit. It’s just worth more now.
Your HSA, if you have access to one. If your employer offers a high-deductible health plan and you’re enrolled, you have access to what I consider the most underrated account in the tax code. We’re dedicating an entire post to it later in the series. Most people use it as a medical debit card when there’s a significantly better strategy available. If you’re not enrolled in an HDHP and have the option, it’s worth a closer look.
And if this promotion came with equity compensation for the first time. RSUs, an ESPP, stock options. These have a way of showing up in an offer letter looking like a bonus and being treated like one indefinitely. They aren’t. Equity comp interacts with your taxes, your portfolio concentration, and your planning in ways that aren’t obvious until someone connects the dots. We’re dedicating all of Week 5 to this. If it’s new to you, it’s worth flagging now so it’s on your radar.
What you’re building toward matters more than ever
When income grows meaningfully, there’s a natural tendency for spending to grow with it. This is human, not irresponsible. The apartment gets nicer, the vacations get easier to say yes to, the expenses find a new level. And many of those choices are completely legitimate. You earned it, the upgrade is real, the life is better.
What I find rarely happens is any intentional decision about the gap between the new income and the new spending.
Not long ago I sat down with a couple, both early 30s, who had just crossed $400,000 in combined income after promotions that roughly doubled what they’d been making together. By any measure they had done things right. For years they were intentional in a way most people aren’t, paying down student loans aggressively, eliminating car debt, buying a house in 2020 when the rate environment made it the right move. They weren’t starting from zero. They had savings, a solid retirement balance, no consumer debt, and a plan their previous advisor had built carefully. By that plan, they were on track to retire comfortably at 62.
Then the income doubled.
What followed was completely understandable. Travel became easier to say yes to. Vacations got nicer. Things they’d been deferring for years finally got the green light. After a long stretch of discipline, the upgrade felt earned. In a lot of ways it was.
But the financial plan didn’t get updated. The savings rate stayed calibrated to an older version of their income. The projections still pointed to 62. Nobody had stopped to ask whether the new income had opened a different door entirely.
Before I showed them any numbers, I asked one question: if there was a real possibility you could stop working at 55 and not have to give up much of the life you’re living now, what would you do with that?
The conversation changed immediately. Within a few minutes we weren’t talking about 55 anymore. We were talking about what working part-time starting at 50 might actually look like. What that life could feel like. Whether that was what they wanted.
They hadn’t been doing anything wrong. They just hadn’t paused to consider what was possible. The potential was there. Nobody had made it vivid enough for them to see it.
Every version of that conversation comes back to the same place. Not “are you spending too much?” but do you know what you’re building?
What’s next
Next week we’re building the foundational framework that sits underneath almost everything we’ve talked about today: the three types of accounts (taxable, tax-deferred, and tax-free) and why where you save matters as much as how much you save. It’s the architecture behind the decisions we’ve been circling, and it’s the piece most high earners have never thought about as a connected system.
As always, if you want the next one in your inbox, subscribe to The Missing Chapter.
— Josh
Joshua Grass, CFA, CFP® is a financial advisor at Stapleton Asset Management. This blog is educational content and does not constitute personalized investment, tax, or financial planning advice. Tax figures referenced use 2025 brackets for illustrative purposes and 2026 IRS limits for active contribution and phaseout figures; consult a tax professional for advice specific to your situation.
Comments are closed