Here’s my shot: Anyone may at any time declare a portion of their income to be “cliff income,” pay 40% percent tax on it to the feds and 20% to the state, and then keep the last 40% to do with as you please. All govt and private programs that measure income are required to disregard cliff income.

The usual solution is something like: for x units of excess past the set limit, remove y unit of subsidy/support.

Example: something costs 20 money, if you earn 100 money or below, then it is subsidized to cost only 10, where 10 money is a subsidy. For every 2 money you gain, 1 money in subsidy is removed.

If you earn 104 money, it will now cost 12.

The x and y values vary depending on what kind of things are subsidized, but this is a fairly simple way of doing it that doesn't punish you harshly for a small difference in earnings.