Benefits Cliff Calculator

A raise can never lower your take-home pay — that's the reassuring truth of the tax-bracket lesson, because only the new dollars are taxed at the higher rate. But take-home isn't the whole picture. A working family's net resources are take-home pay PLUS the means-tested benefits they qualify for: Medicaid or CHIP, an ACA premium subsidy, childcare assistance, SNAP, and refundable credits like the Earned Income Tax Credit. Many of those benefits are tied to an income limit, and some cut off all at once at a hard line — a 'cliff.' Cross it by a single dollar and the whole benefit vanishes, so a modest raise can leave a family with thousands less than before. The chart plots net resources against gross income: normally the line climbs, but at a cliff it drops, opening a 'trap zone' of incomes where earning more leaves you worse off, until your pay finally climbs back over the lost benefit. The number that exposes the myth is the effective marginal rate on a raise — and at a cliff it rockets past 100%, meaning the raise takes more than it gives. The opposite extreme also shows up: deep in the EITC phase-in, a raise is effectively subsidized, an effective rate below zero. The durable lessons: judge a money decision on net resources, not just salary; the most dangerous phase-outs are the abrupt ones; and the fix is almost never to turn down a raise — it's to leap well past the cliff, and for policy to taper benefits gradually instead of cutting them at a line.

Free and interactive — no sign-up, nothing to install. Read the full lesson for the plain-language explanation.