You may not know that there is a US version of The Salary Calculator which calculates take-home pay after income tax and Social Security (which is like the UK’s National Insurance). I thought it would be interesting to see how much of their salary our American cousins get to keep compared with how much we get to hold on to over here. I used an exchange rate of $1.59 to the pound, and the 2012 tax rates for both countries, to create this chart:

Comparison of UK and USA take-home pay

Click the image for a larger, interactive version

As you can see, in most cases the Americans get to keep more of their hard-earned cash than we do. The top rate of federal income tax is 35% in the USA, and they only start to pay that if they earn more than $398,100 in a year – compared with 40% tax in the UK if you earn more than £42,475 and 50% if you earn more than £150,000. Also, Social Security is charged at 5.65% of most incomes, compared to National Insurance which is calculated at 12% (although only above income of £7,605 per year). You might have heard in the news some people saying that the 50% tax rate makes Britain unattractive for wealthy business people – this is what they are talking about – if you could run the same business in the USA and pay tens or hundreds of thousands less in tax each year, you’d think about moving – making any British employees you have redundant and employing Americans instead.

However, before you start packing your bags, there are a few other things to consider. Firstly, you can see from this zoomed-in version of the chart that if you earn less than about £12,000 per year, you actually get to keep more of it here in the UK than you would in the US:

Zoomed-in version of the US and UK take-home comparison

Click the image for a larger, interactive version

Also, these calculations only include federal income tax and Social Security – most of the states charge separate income tax on top of what the central government takes, which The Salary Calculator doesn’t currently work out. Another consideration is that in the UK we can rely on the NHS to provide us with healthcare if we need it either for free or for a relatively small prescription charge, but in the USA health insurance can cost thousands of dollars per year.

Also, it can be difficult to get a decent cup of tea.

You can read more about US tax rates on The Salary Calculator (US).

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Foreign Currency, Income Tax

None of the content on this website, including blog posts, comments, or responses to user comments, is offered as financial advice. Figures used are for illustrative purposes only.

6 Comments to Comparison of UK and USA take home

  1. Most Americans in those top tax brackets take large mortgage interest deductions, thereby significantly lowering their federal adjusted gross income. This and other deductions available in the US but not in the UK would push those lines much further apart.

  2. David on January 25th, 2013
  3. As a Brit living in the US now I can confirm that my takehome pay is significantly higher here than it would be if I earned the same salary back home. Plus I live in Texas so there’s no additional state tax to pay, my company provides excellent health insurance, and the company pension plan + 401K actually adds up to more investment in my retirement than the company pension plan I left in the UK.
    I guess I’ve been lucky on the benefits package I receive as I know a lot of others in the US don’t get anywhere near the health or retirement benefits I do.

    None of these benefits every truly outweigh the lack of a good cuppa though.

  4. Lucy on July 14th, 2015
  5. I’m a Brit and have lived in US for 34 yrs. I left a job in UK that offered 20 days paid leave and cushy hours. I came here and took various unskilled jobs that had no health insurance and offered one week of UNpaid leave after a year! I was fired from a job for asking for two weeks off to visit UK, saying they couldn’t hold my job open. If you have a degree and a good job with benefits, you will keep more of your money in US. However, if you work less than 40 hours a week at any unskilled or semi-skilled job, you will not receive health benefits, and that’s if they are offered. Americans work long hours and take short vacations and in my opinion do not have as good a quality of life as Brits. I intend to move back one day.

  6. Sue Russell on October 24th, 2015
  7. Sue Russell. Things have changed here in the UK in the last 34 years dramatically! Unskilled and even semi skilled people are working full time hours plus to get by. Many people here are exempt from benefits and sick pay. I am working around the clock living with people with disabilities which I get free rent..otherwise would need to work 70 plus hours a week hard work.

  8. Mel on December 16th, 2015
  9. This tax comparison doesn’t look at the problem deeply enough.

    I employ several English people in the USA. Their standard of living in the USA is massively higher than the level they enjoyed in the UK. On good salaries, they live as only really wealthy people can in the UK.

    One lives in a $600,000 property with 10 acres of land 5 minutes from a large town with all amenities. He tells me that his effective rate of income tax in the USA is 11% because of all the permitted deductions. This property would cost over £2 Million in the UK – a sum he could never afford.

    Another lives in a large $350,000 house that is massively better than the nasty over crowded one bathroom ex-council house he and his family rented in the UK. He told me that the very best thing he ever did was to move to the USA.

    In the part of the USA where I operate my business, I have met many British people absolutely terrified that their immigration status might change and they would we forced to return to the Socialist paradise that is the UK.

  10. Clieu on December 16th, 2015
  11. I will always pick the UK over the US any day. We have the NHS so I couldn’t care less how much I’m being taxed, I get free health care so tax me as much as you like.

  12. Corey W on May 30th, 2016

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