An informal tax term for a range of additional income that causes your true marginal tax rate to be higher than your actual tax-bracket rate because of the phaseout of a tax deduction, credit, lower rate, or other special benefit. In this income range, your tax rate is temporarily boosted to a higher level, often until the phaseout zone ends.

This is an important concept in tax planning because having additional income inside the phaseout “bump” zone increases total tax liability more quickly than an income range outside the zone does.

One example of a “bump zone” occurs with capital gains, where additional ordinary income can raise your tax rate on long-term capital gains from 0% or 15% to 20% or can trigger the 3.8% Net Investment Income Tax (NIIT).

The “bump zone” concept can even apply to Social Security benefits, where earning additional income can trigger what experts call a “tax torpedo,” in which your benefits become taxable (up to 85%). That effectively creates a high marginal tax rate within a certain income range.

For another example, see AMT bump zone.