Did you know your employer also pays tax on your salary? It costs the employer $3,600 to pay you $120,000. In other words, every time you spend $10 of your hard-earned money, $2.99 goes to the government.

So, with you and the employer both paying tax, what used to be a 26.9% tax rate now rises to 29%, meaning your real tax rate is actually 2.1% higher than what it seemed at first.