UK vs US Salary: Which Country Pays More After Tax?

Introduction

The UK vs US salary debate is one of the most common questions from professionals considering international opportunities. While US gross salaries often appear higher, the reality is more nuanced when you factor in taxes, healthcare, and cost of living.

Gross Salary Comparison

On paper, US salaries are typically 30-50% higher than UK equivalents. Software Engineers earn around 65,000 GBP in the UK vs $140,000 in the US. Product Managers see similar gaps at 75,000 GBP vs $160,000.

Tax Comparison

UK Tax System

• Personal Allowance: 12,570 GBP tax-free
• Basic Rate: 20% (12,571 - 50,270 GBP)
• Higher Rate: 40% (50,271 - 125,140 GBP)
• Additional Rate: 45% (over 125,140 GBP)
• National Insurance: ~10% on earnings

US Tax System

• Federal rates: 10% to 37% (progressive)
• State taxes: 0% (Texas, Florida) to 13.3% (California)
• Social Security: 6.2% (capped at $168,600)
• Medicare: 1.45% (uncapped)

Real Example: 75,000 GBP UK vs $140,000 US

UK Take-Home (London): Gross 75,000 GBP yields Net 52,500 GBP (30% effective rate)

US Take-Home (New York): Gross $140,000 yields Net $94,000 (33% effective rate) - but pay $6,000+ for health insurance

US Take-Home (Texas): Gross $140,000 yields Net $105,000 (25% effective rate) - still need health insurance

Hidden Costs: Healthcare

The biggest difference is healthcare. UK NHS is free at point of use (funded through taxes). US employer coverage costs $5,000-15,000/year in premiums, plus deductibles and copays. Factoring healthcare, the US advantage narrows significantly.

Conclusion

The US typically pays more, even after adjustments—but by less than headline numbers suggest. For high earners in low-tax US states, the advantage is clear. For those in high-tax states with significant healthcare needs, the gap may be minimal. Use our salary comparison tools to model your specific situation.