How to calculate tax rate when know one salary for married couple

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alowemurphy

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Is there a formula I can use to calculate how much tax I would pay depending on earnings. Basically, spouse is earning 81k (public service, so pension out of that, if makes a difference.) I am currently on 22k. I am looking to increase my salary (change jobs) - but would like to know what is the ideal salary to look for (and not just as much as I can).

We're assessed jointly, so i'm fairly sure my husband gets some of my allowance to reduce how much he pays at the higher rate? How do I work out what salary I could be on before going to the higher tax rate or taking some of the tax allowance from him?

e.g. Is the ideal salary for me approx 25k? What is I earn 26k, will that push me into a higher tax bracket? what if I earn 50k? Husbands salary won't change from 81k, so thats a constant....

Thanks for any help....
 
How about https://taxcalc.ie/budget-2025/ or any of the other many income tax calculators out there?

Bear in mind that the imminent Budget 2026 will probably make changes to tax credits/standard rate band effective from January 2026.
 
Just to be clear on on thing — if you are on 25k and a raise to 26k would push you into a higher tax bracket, you are still better off financially to take the raise. So your question . . .

alowemurphy said:
would like to know what is the ideal salary to look for (and not just as much as I can).
Click to expand...

. . . is hard to answer. You have to tell us why "as much as I can" is not your ideal salary. What is it you want from your salary, if not money?

Also, you should be aware that there are different ways in which you and your husband can choose to be assessed:
  • Joint assessment: The couple's allowances and bands are pooled, and unused credits and standard rate cut-off bands are transferred between them to ensure that they are utilised as fully as possible.
  • Separate assessment: Each spouse/partner is assessed separately, but certain tax credits can be shared (unused standard rate bands, some credits)
  • Separate treatment/single treatment: The couple are taxed as if they were not married.
Joint assessment will tend to produce the best outcome (i.e. lowest aggregate tax bill, and therefore highest net household income). It's the default treament so it's probably what you're on now. But it means that aall the credits and allowances are utilised by the higher earning partner, so viewing your income in isolation you get into the higher rate very quickly. But this may not matter to you if you run a common family budget, and all the earnings of both of you go into the one pot out of which all expenses are paid.

Separate treatment/single treatment, by contrast, ensures the maximimum financial independence of the two spouses — your tax liablity isn't affected at all by what your spouse earns or how much tax he pays, and his tax liablity isn't affected by what you earn or what tax you pay. But it does have the highest risk of your aggregate tax bill being higher than it needs to be, since you can't transfer unused allowances/credits between you.

Separate assessment is between these two extremes - some independence, but some risk of tax inefficiency.

So, basically there's a trade off between minimise the household tax bill and maximising the tax independence of the spouses, and you have to decide as a couple which is the bigger priority for you and your family. Only when you've made that choice, and decided how you want to be assessed, is it possible to model what tax either of you would pay if your income went up (or down).
 
9k of your 20% tax band is transferrable to your spouse.

Individually you can have a maximum of 44k 20% tax band.

So you could earn up to 35k @ 20 % and allow your spouse to earn up to 53k @ 20%.

From a purely tax efficient point of view this is the best combination.

This will likely change in the budget if the 20% tax band is widened.

The maximum transferrable amount of 9k hasn't been increased for very a long time.

This is an example of the many stealth taxes that are being imposed on workers.
 
Thank you for all above. Everything goes into the same pot, so all is combined, and we're assessed jointly.

Basically, the trade-off i'm looking for is for me to not go into the higher tax rate, while using the tax credits to the max. For us, my time spent at home with the kids is worth more than paying that extra 20% in tax. I can have the option to increase my hours pro-rata, so was looking for how much can I earn without higher tax rate, and knowing that husbands salary is fixed.

So, no matter what i'm on, he can't get more than 53k @ 20% and everything he earns over that is at higher rate. I can earn upto 35k before I'll go into the higher tax bracket. So in theory, for us, my ideal salary rate is upto 35k.

Really appreciate the explaining of this in terms I can understand - I was getting completely lost on government website with the numbers! Thanks.
 
@alowemurphy
In the future when the kids are older, if you wanted to increase your working hours, you could earn more than 35k and remain in the 20% tax band if you make contributions into a pension fund.

For example if your earnings were 40k. You could contribute 5k into a pension fund and receive tax relief @ 40%.

The 5k pension contribution effectively reduces your income back to 35k, so you remain taxed @ 20% on your income.
 
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The OP could earn in excess of 35 and pay the excess into a pension fund. And she would then get it back out at an average tax rate of considerably less than 20%.

But not for many years. And if the trade-off she is making is between earning more money and spending more time with her kids, she can only spend more time with her kids now. So additional income that she will receive in a couple of decades time, no matter how attractive the tax rate, may not induce her to work more now.
 
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