Recursive function returns undefined

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In this arm of your function:

if (taxWage > minWage) {
    // calculates tax recursively calling two other functions difference() and taxStep() 
    tax = tax + difference(taxWage) * taxStep(taxWage);
    var newSalary = taxWage - difference(taxWage);
    taxes(tax, newSalary); 
}

you are not returning a value from the function or setting returnTax. When you don’t return anything, the return value is undefined.

Perhaps, you want this:

if (taxWage > minWage) {
    // calculates tax recursively calling two other functions difference() and taxStep() 
    tax = tax + difference(taxWage) * taxStep(taxWage);
    var newSalary = taxWage - difference(taxWage);
    return taxes(tax, newSalary); 
}

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