A Second Job – is it worth it?

Is getting a second job worth it? When I’m talking to clients about achieving their financial goals one way that can really help with some extra funds is taking on a part time job. Many people comment that it’s not worth it as it all goes in tax. But is this really true?

If you have more than one job you will need to work out which is your main job. This will usually be the job that you earn the highest income from. You will need to use a different tax code for all other jobs you do apart from your main one. Below are the current secondary tax rates.

If your annual income from all sources is...	then your secondary tax code is...	and your secondary tax rate is...
$14,000 or less	SB	10.5%
between $14,001 and $48,000	S	17.5%
between $48,001 and $70,000	SH	30%
between $70,001 and $113,768 (+ACC)	ST	33%

Note: If you have a student loan as well the codes will be different.

The tax rates are exactly the same as they are on your main income so you do not pay more in tax if you have a second job. However if your second job takes you into a higher tax bracket then you will pay the higher rate on the amount of income that is in the next bracket. Let’s look at some examples:

You earn $45,000 per year before tax on your main income. You take on a second job earning $5,000 per year. You will pay 10.5% tax on your income to $14,000, then 17.5% on your income from $14,001 to $48,000, and then 30% on your income over $48,000 per year which is $2,000. You pay an additional 12.50% in tax on $2,000 as over $48,000 you go into the next tax bracket.

If you earn $50,000 per year from your main income and earn another $10,000 from a second job your extra income stays in the same tax bracket so the tax rate doesn’t increase.

You will find more details on the rates here.