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Second Income vs Childcare Break-Even Calculator

The salary is taxed first. Childcare comes out of what is left.

Second salary ($/yr)

Marginal tax rate (%)

Childcare ($/mo)

Childcare subsidy ($/mo)

Commuting ($/mo)

Other work costs ($/mo)

Benefits withdrawn ($/mo)

Employer pension (%)

Hours worked per month

Household keeps

$463/mo

A second income is taxed at the household's marginal rate, and childcare is paid from what is left. That order matters: the salary arrives already reduced, then the largest cost comes out of the remainder. Tax rules, subsidies and benefit tapers vary by country and by household — treat this as a scenario, not tax advice.

Effective hourly rate: $3.05
Break-even salary: $29,824
Share of gross retained: 15%

What you entered

Second salary ($/yr): 38000Marginal tax rate (%): 32Childcare ($/mo): 1450Childcare subsidy ($/mo): 300Commuting ($/mo): 220Other work costs ($/mo): 180Benefits withdrawn ($/mo): 140Employer pension (%): 5Hours worked per month: 152

1
Take-home from the second salary
$3,166.67 a month × (1 − 32% marginal rate)= $2,153.33 a month
2
Childcare after any subsidy
$1,450.00 − $300.00= $1,150.00 a month
3
Everything else that working costs
$220.00 commuting + $180.00 work costs + $140.00 benefits withdrawn= $540.00 a month
4
What the household actually keeps
$2,153.33 − $1,690.00= $463.33 a month ($5,560.00 a year)
5
Per hour worked
$463.33 ÷ 152 hr= $3.05/hr — 15% of gross pay
6
Salary at which this breaks even
$20,280.00 of costs ÷ (1 − 32%)= $29,823.53 — plus $158.33/mo of employer pension not counted above

Result

Household keeps: $463/mo

A $38,000 salary leaves the household $463 a month — $5,560 a year, and only 15% of the gross pay. That works out at $3.05 an hour. The break-even salary is $29,824: below that the job costs the household money. The employer pension adds $158 a month of value that never reaches the current account but counts toward retirement, taking the real figure to $622.

What a second household income is actually worth

Each row taxes the second salary at a 32% marginal rate, then subtracts childcare after a $300 monthly subsidy, $200 of commuting, $150 of work costs and $190 of withdrawn benefits. Hours are 152 a month.

Second salary	Childcare per month	Kept per month	Kept per year	Effective hourly rate	Share of gross kept	Break-even salary
$25,000	$800	$377	$4,520	$2.48	18%	$18,353
$30,000	$1,000	$460	$5,520	$3.03	18%	$21,882
$38,000	$1,450	$463	$5,560	$3.05	15%	$29,824
$45,000	$1,450	$860	$10,320	$5.66	23%	$29,824
$55,000	$1,800	$1,077	$12,920	$7.08	23%	$36,000
$70,000	$1,800	$1,927	$23,120	$12.68	33%	$36,000

The effective hourly rate is the column that changes the conversation: a $38,000 salary resolves to $3.05 an hour once childcare and the rest are netted off, because the household keeps only 15% of the gross. Compare rows three and four - the same childcare bill against a $7,000 higher salary nearly doubles what is kept, since costs are fixed while the salary is not. The break-even column is the salary at which the job pays exactly nothing in cash. None of this settles the decision: childcare costs fall away as children start school while a career gap does not repair itself, and pension accrual, skills and progression all continue. The employer pension is deliberately excluded from the kept figure because it cannot pay this month's bills.

A second income break-even calculator shows what a household actually keeps from a second salary once the costs of earning it are subtracted. The arithmetic runs in an order that surprises people. The second income is taxed at the household's marginal rate rather than from a fresh personal allowance, so it arrives already reduced. Childcare, which is usually the largest cost, is then paid out of what remains. A salary that looks substantial can leave a few hundred a month behind.

Childcare after subsidy is the biggest line, but it is not the only one. Commuting has a real monthly cost. So do the incidental expenses of working - lunches, work clothing, the convenience spending that comes with having less time. In many countries a second income also withdraws means-tested support, and because that withdrawal happens as income rises it behaves exactly like an additional tax on the same money. Adding it to the cost side is what makes the household's real position visible rather than the pay slip's.

Two outputs make the result usable. The effective hourly rate divides what the household actually keeps by the hours worked, and it is frequently the number that changes the conversation - a professional salary can resolve to something close to minimum wage once childcare is netted off. The break-even salary is the level at which the job pays exactly nothing after its costs, which is the right benchmark when weighing a role, negotiating hours, or deciding whether a promotion that adds childcare days is worth taking.

Two things this deliberately does not do. It does not tell you whether to work, because the financial answer is one input among several: career continuity, pension accrual, professional skills that decay during a long absence, and the simple fact that childcare costs fall away as children start school while a career gap does not repair itself. The employer pension contribution is shown separately for exactly that reason - it is real money that never reaches the current account. And it is not tax advice: rates, subsidies and benefit tapers differ by country and by household, so the figures are a scenario to test against your own circumstances, not a determination.

Marginal rate, not average rate

A second household income stacks on top of the first, so it is taxed at the marginal rate from the first dollar rather than starting again at the bottom of the scale. Using an average rate makes the salary look considerably more valuable than it is. Where benefits taper as income rises, that withdrawal behaves like an extra layer of tax on the same money.

Effective hourly rate is the honest comparison

Dividing what the household actually keeps by hours worked converts an annual salary into a figure you can compare against anything else. It is often the calculation that reframes the decision, because a professional salary can resolve to a few dollars an hour once childcare is netted off - while career continuity and pension accrual continue regardless.

Frequently asked questions

A 38,000 dollar second salary with 1,450 a month of childcare - what does the household keep?

463 dollars a month, or 5,560 a year. At a 32 percent marginal rate the salary nets 2,153 a month; childcare after a 300 dollar subsidy is 1,150, and commuting, work costs and withdrawn benefits add 540 more. That leaves 14 percent of the gross pay.

What is the effective hourly rate on that?

3.05 dollars an hour across 152 hours a month. That is the figure worth putting next to the annual salary, because it is what the household genuinely gains per hour worked once the costs of working are subtracted.

At what salary would this break even?

29,824 dollars. Costs of 1,690 a month come to 20,280 a year, and covering that from income taxed at 32 percent needs 20,280 divided by 0.68. Below that salary the job costs the household money in cash terms, though pension and career effects continue either way.

Does the employer pension change the answer?

It improves it without adding cash. A 5 percent contribution on this salary is 158 dollars a month, taking the real benefit to 622. It is deliberately shown separately because it cannot pay this month's childcare bill, but it is genuine compensation and ignoring it understates the job's value.

Should we stop working if the number is small?

This calculator prices one year and cannot price a career. Childcare costs fall away as children reach school age while a gap in employment does not repair itself, and pension contributions, skills and progression all compound. A small positive figure now can still be the better decision over ten years - which is a judgement, not a calculation.