Income Splitting Calculator
Calculate household tax savings from income splitting between spouses using US marginal tax brackets.
Returns federal tax saved by shifting income.
Income splitting is a tax planning strategy that shifts income from a higher-earning spouse or family member to a lower-earning one, reducing the household’s total tax burden by leveraging lower tax brackets.
Core formula: Tax Without Splitting = Tax(Total Income, High Earner’s Rate) Tax With Splitting = Tax(Income A) + Tax(Income B) Tax Savings = Tax Without Splitting − Tax With Splitting
Why it works — progressive taxation: Income tax is levied at progressively higher rates as income rises. By distributing income across two people, you use more of the lower brackets and avoid the higher ones.
US 2025 federal income tax brackets (single filers):
| Income Range | Rate |
|---|---|
| $0–$11,925 | 10% |
| $11,925–$48,475 | 12% |
| $48,475–$103,350 | 22% |
| $103,350–$197,300 | 24% |
| $197,300–$250,525 | 32% |
| $250,525–$626,350 | 35% |
| Over $626,350 | 37% |
Worked example: Household income: $200,000 — all earned by Spouse A (single filer), Spouse B has no income. Tax on $200,000 ≈ $39,615
After income splitting to $100,000 each: Tax on $100,000 × 2 ≈ $17,400 × 2 = $34,800 Tax savings ≈ $4,815/year
Legal methods: Spousal RRSPs (Canada), hiring a spouse as a legitimate employee, family trusts, business income allocation in partnerships, pension income splitting (Canada/UK). In the US, the marriage penalty/bonus already partially reflects combined filing, making this most relevant for business owners and self-employed individuals.
Tax professionals can identify the optimal split ratio — sometimes a 60/40 or 70/30 split outperforms an equal 50/50 split depending on deductions.
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This calculator runs entirely in your browser, so the numbers you enter stay on your device. The math behind it is written by hand and tested against worked examples and standard references before the page goes live.
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