Calculators
Benefits Cliff Calculator
Calculate the net effect of a pay rise after extra taxes and lost public benefits, and the effective marginal tax rate.
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The tool
Enter your numbers below. Results update as you type, and nothing leaves your browser.
Everything you enter stays on your own machine. Nothing is sent to us or to anyone else, which you can confirm in your browser network tab.
What people use it for
- Evaluating a raise or promotion
- Benefits counselling
- Workforce development programmes
- Policy analysis
About this tool
What the Benefits Cliff Calculator does
A benefits cliff happens when a modest increase in earnings causes a household to lose more in benefits, such as food assistance, childcare subsidies or health coverage, than it gains in take-home pay. This calculator nets the raise against taxes and lost benefits to show the real change in resources.
It also works as a benefits cliff analyzer.
Formula
- Raise after tax = raise × (1 − tax rate)
- Net change = raise after tax − benefits lost − new costs
- Effective marginal rate = (raise − net change) ÷ raise
Worked example
Using the starting values in the calculator above:
| Input | Value |
|---|---|
| Annual pay increase | $5,000 |
| Tax rate on the extra pay (incl. payroll tax) | 20% |
| Benefits reduced or lost | 3 entries |
| New costs (e.g. premiums, copays) | $0.00 |
| Result | Value |
|---|---|
| Net change in household resources | -$1,400 |
| Result | Worse off: a benefits cliff |
| Effective marginal tax rate | 128.0% |
| Raise after tax | $4,000 |
| Benefits lost and new costs | $5,400 |
How to read the result
Some benefits phase out gradually, others stop at a threshold. Knowing which helps decide whether a slightly larger raise avoids the cliff.
Longer-term gains such as career progression may still make a raise worthwhile despite a short-term cliff.
Estimates only. Official rates and rules change; confirm figures with the relevant agency before relying on them.
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Questions
Questions about this tool
The things clients actually want to know — costs, timelines, ownership and what happens after launch.
When a small income increase causes a larger loss in public benefits, leaving the household worse off.
The share of extra earnings lost to taxes and reduced benefits.
By planning the size and timing of raises, and using transitional benefits where available.
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