How to use it
- Use the formula below with your own figures.
The formula
Your bracket is the rate on your top slice of income.
Worked example
Earning into a new band only taxes the portion above the threshold.
Frequently asked questions
Does a raise cost me?
Only the amount above the threshold is taxed higher.
Effective rate?
Usually well below your top bracket.
Tips
- Know your marginal vs effective rate.
- Set money aside as you earn if tax isn't withheld.
- Keep receipts for anything deductible.
Key terms
- Marginal rate
- The rate on your top slice of income.
- Effective rate
- Your overall average tax rate.
- Deduction
- An amount subtracted from taxable income.