Income Tax Calculator
Income tax on bands you enter, with every slice shown, the effective rate next to the marginal one, and the effective rate inside an allowance taper.
Income £112,000.00
allowance £6,570.00
allowance lost to the taper £6,000.00 of £12,570.00
Taxable income £105,430.00
What each slice costs
£0 to £37,700 £37,700.00 at 20% is £7,540.00
£37,700 to £112,300 £67,730.00 at 40% is £27,092.00
Tax £34,632.00
effective rate 32.85% of the taxable income
of the whole income 30.92%
marginal rate 40%, which applies to the next amount earned and not to the rest
take-home £77,368.00
On the next 1,000 earned
tax £400.00
kept £600.00, 60% of it
with the taper £600.00, an effective 60% because the allowance shrinks as well
At other incomes
£56,000 £9,832.00 tax, 17.6% of it
£84,000 £21,032.00 tax, 25% of it
£112,000 £34,632.00 tax, 30.9% of it ← yours
£168,000 £62,445.00 tax, 37.2% of it
£224,000 £87,645.00 tax, 39.1% of it
Tax is £34,632.00 on £112,000.00, which is 30.92% of it. The marginal
rate is 40% and the effective rate is 32.85%: on a progressive scale the
second is always lower, and confusing the two is why people believe a
raise can leave them worse off.
A higher band applies to the slice above its threshold, not to the whole
income. Crossing a threshold changes what the next amount earned is
taxed at and nothing about what came before it, so a raise always leaves
more money unless a cliff-edge benefit is involved.
The allowance taper is doing real damage: £6,000.00 of allowance has
gone, and inside the taper each extra unit of income is taxed at its own
rate plus the rate on the allowance it removes. That is how a published
40 percent band becomes an effective 60.
This is arithmetic on the bands you entered, not a tax return. Real
systems have separate scales for different kinds of income, reliefs that
change the taxable amount, national and regional variations, and
rounding rules, none of which are here.
Dividends, capital gains, savings interest and earned income are usually
taxed on different scales and often in a set order. Running all of it
through one scale gives an answer that is wrong in a way that is hard to
see.
Social contributions are a separate calculation with their own
thresholds, and they are frequently larger than income tax at low
incomes. A take-home figure that leaves them out is not a take-home
figure.
Nothing here constitutes tax advice. For anything that matters, the
numbers go to somebody who is qualified and insured to sign them.
Output is valid and updates as you type.
Fix the highlighted fields to update the output.
The belief this exists to correct is that moving into a higher band taxes all of your income at the higher rate. It taxes the part above the threshold. People turn down raises over the difference, so the output shows what each slice cost, the effective rate next to the marginal one, and what the next amount earned is actually worth.
The rates are entered rather than built in. A hard-coded table is wrong for every country it is not, and wrong for the one it is as soon as the next budget lands. The defaults are the UK’s for a recent year, and they are a starting point.
The part worth knowing about is the allowance taper. An allowance withdrawn as income rises creates a band where each extra unit is taxed at its own rate plus the rate on the allowance being removed, which is how a published 40 percent band becomes an effective 60.
How to use
- Put in the income for the year.
- Put in the bands, one a line, as an upper limit of taxable income and a rate. The last line takes
aboveinstead of a limit. - Add the allowance, and the taper if your system has one, to see the real marginal rate.
Example
£112,000 with a £12,570 allowance tapering away at 50p per pound above £100,000:
Income £112,000.00
allowance £6,570.00
allowance lost to the taper £6,000.00 of £12,570.00
Taxable income £105,430.00
What each slice costs
£0 to £37,700 £37,700.00 at 20% is £7,540.00
£37,700 to £112,300 £67,730.00 at 40% is £27,092.00
Tax £34,632.00
effective rate 32.85% of the taxable income
of the whole income 30.92%
marginal rate 40%, which applies to the next amount earned and not to the rest
take-home £77,368.00
On the next 1,000 earned
tax £400.00
kept £600.00, 60% of it
with the taper £600.00, an effective 60% because the allowance shrinks as well
At other incomes
£56,000 £9,832.00 tax, 17.6% of it
£112,000 £34,632.00 tax, 30.9% of it ← yours
£224,000 £87,645.00 tax, 39.1% of it40 percent on the band, 60 percent in reality, and 30.9 percent overall. Three different true statements about the same income, which is why the argument never ends.
Pitfalls
Marginal is not effective. The marginal rate applies to the next amount earned. The effective rate is what the whole income paid. On a progressive scale the second is always lower, and quoting one while meaning the other is the source of most tax confusion.
A raise cannot leave you worse off on a band alone. Crossing a threshold changes only what the extra money is taxed at. Where a raise does hurt, the cause is a cliff-edge benefit or allowance, not the band.
Tapers are where the real rates hide. They appear in no published table. If your income is near one, the effective rate on the next amount earned can be far above the band you are in, and a pension contribution that takes income back below the threshold is worth more than its face value.
Band limits here are limits of taxable income. The allowance is deducted first, so a 20 percent band ending at 37,700 of taxable income is a band ending at 50,270 of gross with a 12,570 allowance. Mixing the two conventions is the most common way this calculation goes wrong.
Different income types use different scales. Dividends, capital gains, savings interest and earnings are usually taxed at different rates and in a set order. Running everything through one scale gives an answer that is wrong in a way that is hard to see.
Social contributions are separate and often larger. At low incomes they frequently exceed income tax. A take-home figure without them is not a take-home figure.
Regional variation is real. Several countries have different rates by region or state, and the arithmetic here has no way of knowing which set you meant.
Compatibility
Arithmetic in the browser: nothing is uploaded and nothing is stored.
Bands are read from text, which means a flat rate, a two-band system and a seven-band system all work
without a code change. Rows may be separated by newlines, commas or semicolons, limits may carry
thousands separators, and rates may carry a percent sign. Bands are sorted by limit and the highest one
is always treated as open, so a missing above row cannot silently cap the scale.
The slices are computed rather than the total, and the test suite asserts they sum to the total at every income including exactly on a threshold. The marginal rate is the rate on the last money that was actually taxed rather than the band the income falls in, which differ at a boundary.
The taper is applied before the bands and cannot take an allowance below zero, so a high income simply loses all of it rather than acquiring a negative allowance.