The fact that this persons uses the term "push you into a different tax bracket" suggests they don't understand how tax brackets work.
Here are a couple of graphs that show how it actually works: https://imgur.com/gallery/aS1zJg7
The first shows what tax would be on a single person in 2023 whose income is entirely salary and whose only deduction is the standard deduction, for income up to $1 million.
The second shows what the tax would be as a fraction of your total income.
If you're filing single the LTCG threshold is $518,900 in 2024. So as an example, if you made $400,000 in income and $118,000 in LTCG that would put you just under the threshold to pay 15%. you'd calculate ordinary income tax on the $400,000 and then you'd pay $118,000x15%=$17,700 in LTCG.
But if you made just $2000 more in LTCG you'd pay much more as you'd be bumped into the higher 20% rate. You'd end up paying $120,000x20%=$24,000 in LTCG taxes, an increase of $6300 in taxes on just and additional $2000 in gains.
First, let's state that you are referring to taxable income, not gross income. The former is usually non-trivially smaller than the latter, due to adjustments (including pre-tax paycheck deductions) and itemized/standard deduction.
Using 2023 numbers (since we don't know whether 2024 tax law will change between now and the end of the year), and your dollar amounts:
$400K of ordinary taxable income tops out at 35% marginal rate, the total tax is $111,895.
$120K of LTCG income is taxed as follows:
$92,300 x 15% = $13,845
$27,700 x 20% = $5,540
Total LTCG tax = $19,385
(the 2023 LTCG 15% bracket tops out at $492,300)
Or in a simpler use case, you know one year or the other will be a low income year, you sell the stock in that year.
Let's say you make $100,000 and a whopping $50,000 of it is RSUs and ESPPs. You've been very lucky and the stock portion is now worth $75,000. You sell. Your federal bracket has gone up by 2% and your California bracket has stayed the same. You will owe an additional $500 in taxes. This is just about the worst case scenario where you're not making that much for tech and your comp is exactly on the edge of a tax bracket and your comp is 50% equity and your company went up by 50% since vesting.
If the brackets are 10,000 @5%; 100,000 @10%, if you make 100,000 your first 10,000 is taxed at 5% and the next 90,000 is taxed at 10%.
Outside of long/short term gains, all things being equal, the timing is not especially important
See also:
https://www.businessinsider.com/personal-finance/new-york-st...
“However, New York also has a provision called tax-benefit recapture, which essentially turns its progressive tax into a flat tax for high earners, says Eric Bronnenkant, head of tax at Betterment and a certified public accountant.”
Everyone else, carry on. Nothing to see here.
It actually matters - or can matter, anyway - if you have any event pushing your income above $1M (if filing single) because of the change in deduction treatments.
But it would be sad if the entire article is dismissed by HN readers just because they tripped on the one line you point out.
Imagine instead that the author said (and I would argue they probably meant), "push more of your income or benefits exercised into a higher tax bracket".
I think this is what most people mean since it is behind the strategy of holding on to benefits until you are retired (or in a lower tax bracket) before exercising them.
Moving up a bracket doesn't change all the previous brackets, it just affects money past that level. It's not like a hard line that you cross and it changes the whole picture.
If you think otherwise, give us a scenario where is matters.
Scenario 2: If you want to funnel as much money as possible into your employer's plan, you might want to use a Roth vehicle to do that. (Your pre-payment of taxes on it means that $100 in a Roth is worth more than $100 in a pre-tax vehicle.) Your 401k plan might not support mega backdoor 401k contributions (many plans don't allow after-tax contributions [distinct from Roth]) and you might have other IRAs that would drag in the pro-rata rule for backdoor IRA contributions.
Example: year one 50k income 22% marginal tax. Year two 180k income 32% marginal tax. You have 100k more ordinary income. You will pay less tax if it occurs in year one.
Yes for this to matter you need to have some control over the order of payments. This is most commonly a 401k. Otherwise, it’s likely to be relevant through some form of business ownership. Perhaps you have a big contract coming in, or you are self employed, or you are receiving a bonus, or perhaps you own some shares where you could elect to sell when they only qualify as ordinary income as discussed by the original article.