If you're a stay-at-home mom deciding whether to go back to work or someone looking to pick up a second job, this is EXACTLY how to calculate the numbers! A lot more will change than you realize, and of course taxes are the biggest!

How Much is A 2nd Income Really Going To Bring In?

I left my job as a CPA when my husband received an international business assignment back in 2011. While I’ve kept up on my CPA license, I have yet to go back into the full-time working world. Now that my husband is more established in his career and makes substantially more than when we were a dual-income family, I suspect that a vast portion of that potential paycheck would go to taxes, childcare, and work-related costs.

If you're a stay-at-home mom deciding whether to go back to work or someone looking to pick up a second job, this is EXACTLY how to calculate the numbers! A lot more will change than you realize, and of course taxes are the biggest!

I was curious exactly how much I would really make if I went back to work, so naturally, that called for a new spreadsheet. My calculations tell me that the amount of money I would actually have in my pocket from going back to work is approximately 43% of my expected salary. Only forty-three percent! I would basically be working for less than half my pay.

I feel really fortunate to be in this situation where I can choose whether to work and we’ve made adjustments in our lifestyles as well to accommodate living on only one income. However, I do miss my job and at this real pay rate, I can see that I will really need to love what I do to make going back to work worth it for me.

This type of analysis doesn’t exclusively apply to a spouse considering going back to work, though. This is just as applicable to getting a second job, either employed by yourself or a company.

Step 1: Determine Exactly What Will Change

You can expect a lot more changes to your budget than just your income and payroll deductions. This is true especially if you’re a spouse considering going back to work after a brief period of time outside the workforce.

The first step is to take a look at some of these changes, starting with the biggest ones. Here’s a list to get you started:

  • FICA payroll taxes
  • Federal taxes
  • State taxes
  • Gasoline
  • Parking fees
  • Auto maintenance & repairs
  • Groceries
  • Eating out
  • Work-related clothing
  • Child care

This will cover the majority of significant expenses, but there may be other adjustments as well. This in large part depends on your specific job. Visualize your new work situation and make a list of all of these things plus any additional expenses that you expect to incur.

Step 2: Quantify the Changes To Your Budget

You know by now that I always want to see the numbers. I don’t want to just talk about how your finances will change when you add a 2nd income (or a 3rd or more!). I want you to actually be able to calculate those exact changes so that you can make an informed decision that includes both qualitative and quantitative information.

Here’s a preview (click to see in PDF format) of the exact spreadsheet I used (with different numbers) to calculate the changes. This is adapted directly from my budget spreadsheet, so if you’re already using that budget you’re over half way there already in getting this done, as you can copy and paste that 1st column directly into this spreadsheet!

Download the spreadsheet for Excel | Google Docs

Just a quick note on the spreadsheet, in the “2nd Income” column, only input income and expenses directly related to the additional job, not all of the budget adjustments that would occur (such as saving more or allocating more to holiday and vacation expenses). The point of this spreadsheet is to calculate the real income your 2nd job will bring in, not what your budget will look like afterward.

Let’s go through each of these possible changes in detail.

FICA Payroll Taxes

FICA withholding taxes include a Social Security and a Medicare component.  The Social Security tax is 6.2%, but is capped when you have $127,500 in income for 2017. The Medicare portion is 1.45% with no cap. An additional .9% tax Medicare tax is required to be withheld when you reach $200,000 in wages.

To calculate the wages for FICA taxes, you subtract HSA/FSA contributions, dependent care account contributions and medical premiums. For more information, take a look at the payroll tax withholding class (part of the comprehensive financial plan series).

If you are taking on self-employment, you will also need to pay the employer portion as well. Your FICA tax liability will be twice the amount calculated above, except for the additional .9% Medicare tax which is solely the responsibility of the employee.

Federal & State Taxes

As you might expect, income taxes are very likely to be your largest expense to consider when adding a 2nd income. It is also the single-most complicated calculation for you to determine.

If you prepare your tax returns yourself, the simplest way to determine your tax liability is to create a second version of your most recent return in the tax software and include the 2nd income, along with any other changes to tax-deductible items. Although the tax brackets, exemptions and standard deduction may slightly change from the prior year, it will likely yield an estimate that is close enough for this purpose.

Another simple way to calculate the estimated increased tax liability is to use your marginal tax rate. Your marginal tax rate is the percentage of tax you will pay on your next dollar of regular income (such as salaries and wages).

To find your marginal tax rate, start by looking at your taxable income on line 43 of the Form 1040. If you are in substantially the same financial situation as the prior year, you can use numbers from your last year’s tax return and just adjust them slightly for any small changes.

Then, compare this year’s expected taxable income to the tax brackets for the current year (I’m showing 2017 here). This will show you your marginal tax rate, which you can multiply by your 2nd income figure. If your 2nd income will fill up that tax bracket, you’ll have to use both that marginal rate and the next marginal rate for the remaining income.

For example, let’s assume that you’re married and your taxable income for 2016 was $60,000 and you think that it will be the same this year (before adding a 2nd income). You are a previous stay-at-home mom considering going back to work at an annual salary after pre-tax deductions of $55,000. The first $15,900 of this 2nd income would be taxed at 15% and the remaining $39,100 would be taxed at the next tax bracket rate of 25%.

Don’t forget to also account for decreases in any eligible tax credits you may be eligible for, such as the child tax credit.

Using your marginal tax rate will not result in an accurate calculation if you have a significant amount of income taxed at capital gain rates. This is due to the capital gain rates being higher when you are in higher tax brackets. If you have significant changes in income or deductions from the previous tax year, you’ll want to do a more detailed calculation.

I personally use a spreadsheet that I’ve customized to my tax situation and I update the tax brackets and personal exemptions each year. If you want to learn more about calculating your taxes, I suggest referring to my Tax Challenge.

Transportation Costs

Unless you’re working from home, transportation costs will be a significant offset to your additional income.

You’ll want to factor in gasoline costs by using the distance between your home and workplace and your vehicle’s gas mileage. In addition, estimate at least a small increase in your auto repairs and maintenance bills as well as any applicable tolls and parking fees.

Food Costs

I’ve worked a variety of work schedules since my first (screaming) bundle of joy made me a mother. I’ve worked at home, worked in the office, and some weeks even worked up to 85 hours a week. The last thing I wanted to do after a busy day under any of these circumstances was to make dinner.

Neither my husband nor I really enjoy cooking, so we spent a lot more on eating out when I was working. In addition, we both enjoy going out to eat for lunch during workdays, so that was another huge hit to our budget.

When you’re determining how much food costs will increase, be realistic and admit that costs are very likely to go up significantly. Your grocery bill may decrease a little, but your eating budget will definitely go up.


If you are so lucky as to work in a place that doesn’t require a professional wardrobe or uniform, you may not have any extra costs for clothing (lucky!).

However, if you’re working in a professional office, like I would be, plan some initial costs to update your wardrobe, as well as maintain it regularly. This includes the cost of dry cleaning and tailoring if you are required to wear professional work attire. That gets expensive fast!


Last, but certainly not least are childcare expenses. It will definitely be expensive. In fact, the average cost of full-time daycare for one child is over $10,000 per year in the United States.

Even having school-age kids will require most full-time working parents to get before or after school care, which costs about $1,300 per school year per child in my area for one or the other (both would be double that cost).

Fortunately, there are some tax breaks you can get by either electing for a pre-tax dependent care account or taking the dependent care credit (or both, but not on the same funds paid!). Even with these credits, it’s likely that paying for childcare will take a big chunk out of your paycheck.

Step 3: Decide Whether It’s Worth It

The only question I can’t answer for you is whether it’s worth it to add that second income. If you’re in this position, you’re likely more fortunate than the majority of Americans.

By looking at what you’re truly able to bring in with your 2nd income, you can make a more informed decision about whether it will actually be worth it financially based on the number of hours, stressfulness of the job and other employment benefits that can make it more worthwhile.

There’s so much more to life than money, and there are many more reasons to work than for money alone.


Have you been in this situation of deciding whether to go back to work as a stay-at-home mom or pick up another income? What are some other things that you considered?




6 Responses

  1. Fantastic post! I think you covered all the financial aspects except maybe beauty – haircuts, styling, makeup, etc., – some people are going to want to look good out of the house 🙂 Of course, the frugal ones of us will do that stuff at home.

    The biggest costs that are not financial include time – the impact of time away from the children and home. Unfortuantely, those costs are hard to predict, and you don’t understand the real cost until it has long been spent.

    Going back to work or taking on a second job is a big decision, something I struggled with a couple of times. Ultimately I think we need to do what we and only we believe is best. Not worrying about what others think. Define why you want to work. If it all lines up with your personal and family values, and is for inside-out versus outside-in reasons, then learn to meal-prep, pack your lunch, cut your hair, etc. for some additional paycheck savings. 🙂

    1. That’s an excellent point about the beauty costs (you can tell how often I get my hair cut, lol!). I’ve been a working mom (full-time, part-time, working from home, etc.) and a stay-at-home mom and I definitely had time costs either way. Thanks for sharing, as I’m continually evaluating this and keeping my values in mind.

  2. Don’t forget about the lawn cutting service and house cleaner. Last thing you want to do after a long day at work is do stuff in the house.

    1. I can’t believe I forgot that! Those are the last things I want to do, when I’ve had a long day at home too 🙂

  3. If I ever do get married and have kids, I’d probably want my wife to stay home and look after the kids (provided she wants to of course). I grew up with my mom staying at home, which is why I had a great childhood. My mom has probably been my greatest mentor in life.

    1. I’m glad you added the “provided she wants to” 😉
      The benefit of having that 2nd income is greatly reduced when you factor in taxes and childcare costs especially!



I’m Kathryn Hanna-wife, mother of 3 and a Certified Public Accountant. I love to budget (really, I do!) , build spreadsheets and spend money on travel, sewing supplies and good chocolate.


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