<prompt> Human: A friend of mine recently declined a pay raise because he believes that the higher income would somehow result in him making less money due to taxes. I didnt get into too much details with him, but he mentioned this is a result of Earned Income Tax Credit. I know the US tax system is based on marginal rates and theres no way you can earned less by making more, but is there ANY validity to his thinking? Is there any way you can loss money by earning more or vice-versa?Edit: Thank you all for your thoughts and opinions. All of you were very helpful. I think I may suggest that my friend speak to a tax professional or a CPA. I agree with most of you that an increase in income likely wont negatively affect him.Edit2: Okay heres what I learned today, and I hope some of you dont have the same thoughts as my friend; 1. You cant lose money from taxes by making more marginal tax system. 2. You cant lose money from Earned Income Credits by making more. The system decreases from a max at a rate of 0.07 per 1.00 earned. 3. You dont lose money by working OT. OT is taxed at the same as regular wages.Your company is probably calculating your tax withholding wrong. 4. It takes a VERY unique situation that is heavily dependent on government benefits to lose money by making more. If you think this is happening you should consult a tax expert.  <response>: My wife worked with non-traditional community college students on various forms of public assistance who ran into this box all the time: they could not take a job paying a slightly higher hourly rate because they would then lose eligibility for certain subsidies, child care, etc. and, net net, be worse off than before. 