US vs UK Tax — Side-by-Side Comparison for 2026 / 2026-27
The US and UK both layer progressive income tax with payroll levies and tax-deferred retirement accounts — but the US has dramatically lower federal rates at most incomes and harsher cross-border reporting. This page compares federal income tax, social levies, retirement, and consumption tax using IRS 2026 figures (single, standard deduction) and HMRC 2026-27 figures (rest of UK).
Take-home pay on the same nominal salary
Same numeric amount taxed as both a USD salary (IRS federal-only, single) and a GBP salary (HMRC + Class 1 NI). Currencies aren't directly comparable. State income tax is excluded on the US side for clarity; pencil it in separately for high-tax states.
| Gross salary | US federal | US FICA | US take-home | UK income tax | UK NI | UK take-home | Gap |
|---|---|---|---|---|---|---|---|
| $50,000 | $3,820 | $3,825 | $42,355 | $7,486 | $2,994 | $39,520 | +$2,835 |
| $100,000 | $13,170 | $7,650 | $79,180 | $27,432 | $4,011 | $68,557 | +$10,623 |
| $150,000 | $24,734 | $11,475 | $113,791 | $54,332 | $5,011 | $90,658 | +$23,133 |
| $250,000 | $51,304 | $15,514 | $183,182 | $99,332 | $7,011 | $143,658 | +$39,524 |
Gap shows US take-home minus UK take-home. Excludes US state income tax (0–13.3%) and pension/401(k) contributions. UK figures use rest-of-UK 2026-27 (Scotland uses different rates with 48% top).
Income tax brackets — side by side
🇺🇸 United States (2026 federal, single)
- $0 – $16,100: 0% (standard deduction)
- +$12,400: 10%
- +$38,000: 12%
- +$55,300: 22%
- +$96,075: 24%
- +$54,450: 32%
- +$384,375: 35%
- $640,600+: 37%
2026 IRS brackets per Rev. Proc. 2025-32. Standard deduction $16,100. Plus FICA 7.65% (6.2% SS to $184,500 + 1.45% Medicare). Plus state income tax 0–13.3%.
🇬🇧 United Kingdom (2026-27, rest of UK)
- £0 – £12,570: 0% (Personal Allowance)
- £12,571 – £50,270: 20% (Basic)
- £50,271 – £125,140: 40% (Higher)
- £125,141+: 45% (Additional)
PA tapers £1-for-£2 above £100k (full PA gone at £125,140) — effective 60% marginal band. Plus Class 1 employee NI: 8% £12,571–£50,270, 2% above. Scotland uses 5 bands with 48% top.
Key structural differences
| Feature | 🇺🇸 United States | 🇬🇧 United Kingdom |
|---|---|---|
| Tax-free / standard deduction | $16,100 standard deduction (2026 single) | £12,570 Personal Allowance (taper above £100k) |
| Top federal/national rate | 37% over $640,600 | 45% over £125,140 (+2% NI = 47%) |
| Effective marginal trap | No specific trap; +0.9% Add'l Medicare above $200k | 60% effective on £100k–£125,140 (PA taper) |
| State / sub-national | 0–13.3% state + city; 9 no-tax states | No (Scotland has separate 5-band system, top 48%) |
| Social/health levy | FICA 7.65% (SS to $184,500 cap + Medicare); +0.9% Add'l above $200k | Class 1 NI: 8% main band, 2% upper; employer NI 15% |
| Universal healthcare | No (employer/Marketplace insurance) | Yes (NHS, funded by general taxation) |
| Mandatory retirement | None; voluntary 401(k) — typical match 50% on first 6% | Auto-enrolment 8% combined (3% employer + 5% employee) |
| Tax-free retirement | Roth IRA $7,500/yr (income limits); Roth 401(k) | ISA £20,000/yr (no income limit; tax-free growth + withdrawal) |
| Tax year | 1 January – 31 December | 6 April – 5 April |
| Filing deadline | 15 April (extension to 15 October) | 31 January online (Self Assessment) |
| Worldwide income | Citizens AND residents (worldwide); FBAR/FATCA | Residents on arising basis; remittance basis available with annual charge |
| Capital gains | Long-term (1+ yr): 0/15/20%; +3.8% NIIT above $200k | 18% / 24% (residential and other from 30 Oct 2024); £3,000 annual exempt amount |
| Dividend taxation | Qualified: 0/15/20%; ordinary at marginal | £500 allowance + 10.75% / 35.75% / 39.35% (2026-27) |
| Estate / inheritance | Federal estate tax 40% above $15M (post-OBBBA) | IHT 40% above £325k NRB (+£175k RNRB on main home); 7-year gift rule |
| Property purchase | No federal/state transfer tax; closing costs ~2–5% | SDLT (rest of UK), LBTT (Scotland), LTT (Wales); first-time buyers pay no SDLT up to £300k (no relief above £500k) |
| Consumption tax | No federal sales tax; state + city 0–10.25% | VAT 20% standard, 5% reduced, 0% on most food/kids' clothes/books |
Retirement: 401(k) vs UK pensions / ISAs
UK auto-enrolment is mandatory; US 401(k) is voluntary. A £100k UK salary auto-enrols 8% combined (3% employer + 5% employee from gross salary). A $100k US salary triggers $0 mandatory employer retirement; if the employer offers a typical 50% match on first 6%, the employee must contribute $6,000 to capture the $3,000 match. Net result: similar combined contributions in many companies, but the UK's mandatory floor protects employees who don't actively elect.
UK ISA has no clean US equivalent. £20,000/yr (2026-27), tax-free growth, tax-free withdrawal, no income limits. Roth IRA is the closest US analog but limited to $7,500/yr with phase-out (single MAGI $153k–$168k 2026). Roth 401(k) has no income limit but follows 401(k) deferral rules. UK Lifetime ISA adds a 25% government top-up on £4k/yr until age 50 — exclusive to first-home buyers and retirement.
Cross-border treaty. The US-UK treaty recognises 401(k)/IRA and UK pensions as 'pensions' (deferred until withdrawal for residents of either country). One-way 401(k)/IRA-to-QROPS transfers exist but trigger US tax + 25% UK Overseas Transfer Charge in most cases. ISAs are NOT treaty-protected — IRS treats holdings as foreign trusts (Form 3520/3520-A) and PFIC rules apply to most UK funds inside.
If you're moving US → UK
- Tax residency: UK residency triggers under the SRT — 183+ days in a UK tax year, or fewer with UK ties. US residency ends for resident aliens on departure, but US citizens remain taxed on worldwide income forever.
- US citizen trap: Continue filing US returns from the UK. Use Foreign Earned Income Exclusion ($132,900 for 2026) + Foreign Tax Credit. Renouncing requires Form 8854 and may trigger expatriation tax.
- 401(k) / IRA: Stays in the US until withdrawal. UK-resident withdrawal taxed at marginal rate, with US foreign tax credit. Don't transfer to QROPS unless a specialist confirms the math.
- ISA caution: US citizens shouldn't open ISAs — IRS requires Form 3520/3520-A annually, and PFIC rules on UK fund holdings inside kill any tax efficiency. Stick with UK pensions, US 401(k)/IRA, and taxable accounts.
- Healthcare: NHS replaces employer health insurance — no more $300+/mo premium deductions. Net-after-cost benefit not visible in pure tax tables.
- FBAR / FATCA: Report any UK account exceeding US$10k aggregate via FinCEN Form 114 (FBAR). Form 8938 (FATCA) thresholds start at US$50k.
- Lower take-home: Expect noticeably lower take-home in the UK on the same nominal salary, especially in the £100k–£125,140 PA-taper range where the marginal rate hits 60%.
If you're moving UK → US
- Tax residency: US residency triggers via Substantial Presence Test or green card. UK residency ends per the SRT — typically when you leave for full-time work overseas (the 'leaver' tests).
- UK pension: Stays in UK; treaty-recognized as US pension (no annual taxation on growth). Withdrawals in the US are taxed at marginal rate; the UK tax-free lump sum (usually up to 25%, capped at the £268,275 lump sum allowance) should be treated as taxable on your US return. Treaty Article 17(2) gives the UK the right to tax a lump sum paid to a US resident, but that paragraph sits under the treaty's saving clause (Article 1(4)), and Treasury's Technical Explanation says the US can still tax it. Some advisers claim an exemption under Article 17(1)(b), which the Technical Explanation reads as not covering lump sums — get cross-border advice before taking that position.
- ISA: Lose ISA tax efficiency on US residency — IRS taxes it as a regular taxable account plus PFIC rules on equity funds inside. Consider closing or moving to cash before US move.
- State choice matters: A move to TX/FL/NV/WA leaves you with US federal only — typically beats UK by $20k+ at $100k salary. CA/NY/NJ adds 9–13% on top, narrowing the gap.
- Capital gains: US deems no exit tax for non-citizens. Long-term gains (1+ yr) qualify for 0/15/20% rates — much better than UK 18%/24%.
- Property: No federal/state transfer tax in the US (closing costs ~2–5% of purchase). Property tax is local and ranges 0.3% (HI/AL) to 2.5%/yr (NJ/IL) of assessed value.
US Federal Income Tax
2026 brackets, all filing statuses, post-OBBBA standard deduction.
US Paycheck Calculator
Net pay after federal, state, FICA, and pre-tax deductions.
FEIE Calculator (Form 2555)
Foreign Earned Income Exclusion for US citizens working abroad.
UK Tax Tools (uktax.tools)
Sister site — UK income tax, NI, ISA, IHT, SDLT, and more.
Frequently asked questions
Is the US or UK a lower-tax country?
Federal-only, the US is significantly lower at most working incomes — the standard deduction ($16,100 single, 2026) and 10–12% lower brackets beat the UK's 20% basic + 8% NI from £12,571. At $100,000 gross, US federal-only take-home is $79,180 (effective 20.8%) versus UK $68,557 (effective 31.4%). Adding state tax (0–13.3%): the US still leads in TX/FL/NV/WA but narrows in CA/NY/NJ. The UK 60% effective marginal trap (£100k–£125,140 PA taper) is brutal for higher earners.
How does a US 401(k) compare to a UK workplace pension?
US 401(k) is voluntary — typical employer match 50% on first 6% (3% effective). The 2026 limit is $24,500 employee elective deferral plus a $8,000 catch-up at 50+. UK auto-enrolment is 8% combined (3% employer + 5% employee, automatic for most workers earning £10k+). UK contributions get full marginal-rate tax relief at source (relief-at-source for personal pensions; net pay arrangement for occupational). A 401(k) deferral reduces taxable income up to the cap. UK pension access age is 55 (rising to 57 from 2028); US 401(k) is penalty-free at 59½.
If I move from the US to the UK, what happens to my tax residency?
UK residency triggers under the Statutory Residence Test (SRT) — most commonly 183+ days in a UK tax year (6 April – 5 April), or after 91 days with a UK tie. US residency ends for resident aliens on departure, but US citizens remain taxed on worldwide income forever. The US-UK treaty provides foreign tax credits and pension recognition. Watch out for FBAR (FinCEN 114) on UK accounts, FATCA (Form 8938), and PFIC issues on UK funds and ISAs.
Can I transfer my 401(k) to a UK pension?
Generally no — transfers from a US 401(k)/IRA to a UK QROPS scheme are allowed but trigger US taxes plus a potential 10% early-withdrawal penalty if you are under age 59½, plus the UK 25% Overseas Transfer Charge unless your QROPS is in the same country you live in. Most US-to-UK movers leave the 401(k) in the US until withdrawal. UK pensions cannot transfer into a 401(k); they are received as taxable foreign pension income at your marginal rate.
Is sales tax different between the US and UK?
Yes — the US has no federal sales tax; states and cities levy 0% (DE, MT, NH, OR) up to roughly 10.25% combined (Chicago, parts of CA). The UK has VAT at a 20% standard rate, a 5% reduced rate (domestic energy), and a 0% rate on most food, children's clothing, and books. The effective consumption-tax burden is significantly higher in the UK on discretionary spending but lower on essentials.
Related Calculators
Federal Income Tax Calculator
10–37% brackets, $16,100 standard deduction, progressive calculation
Tax Burden by Income
Effective tax rate, marginal rate, cumulative federal + state tax
Multi-State Tax Calculator
Multiple state income allocations, residency, part-year nonresidents
401(k) Calculator
Contribution limits, employer match, tax-deferred growth
FICA & Social Security
6.2% SS to $184,500, 1.45% Medicare, 0.9% additional Medicare
Capital Gains Tax Calculator
LTCG 0/15/20% rates + 3.8% NIIT based on income brackets
Sources
US figures: IRS Rev. Proc. 2025-32 (2026 inflation adjustments). FICA: SSA wage base 2026. UK figures: HMRC income tax rates, 2026-27. NI: HMRC NI rates.