<prompt> Human: As the title states, I am currently in the 15 tax bracket because of a bonus of 10,000 and a 5,000 signing bonus pushing me into the 25 tax bracket by about 3,000.What I can do to reduce my taxable income to bump me back down as far as deductions go. Things of note:Bonus are paid out quarterly. So I have received 2 so far, next one is due end of this month. Also have stocks that Ive made a 1000 off of, but I still own the stocks.Questions:Are the stocks considered income or is only into play AFTER I sell?I am able to put 100 into 401k, this would put me under the limit. Will I be able to to take it out the first of next year under a penalty? I would like to have the bonus money in my checking and not have it in my 401k bonus not matched, hence why I am ok taking it back out after he year under a penalty.Is there any other options besides the 401k?Is there any lager deductions I can try to use? I am given per diem, does that count towards taxable income?EDIT from info from bot:Am I getting this right? Ill only be taxed at the higher rate for ONLY the money above the threshold?Thanks!  <response>: You may not understand how tax brackets work.As you move up in income, you move up in tax brackets. Even if you stay in the same bracket, a larger percentage of your income is now in that higher bracket. Simplistically, imagine a system where: 0 - 1000 bracket is 5 1001 - 10,000 bracket is 20If you made 900, you would be paying 900 x .05 45.If you made 2200, you would be paying 1000 x .05 1200 x .20 290.Note that despite going up into a new bracket, only the portion of your income in the new bracket gets taxed at the higher rate.If youre worried about paying more by moving into a new bracket, consider the following:You make 999, and so pay .05x999 49.95 in taxes. If you make 2 more, youre earning 1001 and paying .05x100050.21.20 50.20 in taxes. Youre earning 2 more, paying 0.25 more in taxes, for a net increase of 1.75. This is despite going up from a very low 5 bracket to a high 20 bracket.edited to add another example 