There is indeed a widespread misconception that if more income pushes you into a higher bracket it might make you total after tax income go down. Many people think if you are in the N% bracket it means you tax is N% of your taxable income.
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.
While income tax and short term capital gains do work like that (an increasing marginal rate) long term capital gains (LTCG) do not. They are paid fully at the bracket you fall in to. When calculating tax rates (US federal, states may vary) you apply income first and capital gains second to determine your rate.
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.
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.