In Year 1, AGI is $88K, Year 2 = $96K

In Year 1, taxable income is $67K, Year 2 = $75K

No AMT either year.

In Year 1, tax is $8.1K, Year 2 = $7.9K.

Taxable income has increased by $8K from year 1 to year 2, yet tax has decreased by $0.2K.

How could that be? (assume pre TCJA tax law, Year 1 = 2016 and Year 2 = 2017, and we are not considering credits or withholding or payments of any kind).