How Does Having Two Jobs Affect Taxes?

Having multiple jobs can introduce complexity to tax. While increased earnings contribute to financial goals, they also necessitate a more careful approach to tax planning and compliance to manage obligations effectively throughout the year and avoid potential issues at tax time.

How Multiple Jobs Impact Your Taxable Income

All income earned from multiple jobs is combined to determine total taxable income. The U.S. operates under a progressive tax system, taxing different portions of income at increasing rates. Federal income tax brackets range from 10% to 37%, taxing higher incomes more heavily.

Each employer typically withholds taxes as if their job is the individual’s only source of income. This independent withholding calculation often leads to insufficient tax payments, especially if the combined income pushes the individual into a higher tax bracket. For example, an income that might be taxed at 12% from one job could, when combined with another job’s income, cause a portion of the total earnings to be taxed at 22% or even 24%. This can result in an unexpected tax bill.

Adjusting Your Payroll Withholding

Individuals can manage their tax obligations by adjusting their Form W-4 with their employers. The W-4 form informs employers how much federal income tax to withhold from each paycheck based on the employee’s filing status, other jobs, credits, and deductions. Accurately completing the W-4 helps ensure sufficient tax is withheld to cover the combined income.

For those with multiple jobs, the IRS provides guidance for Step 2 of the W-4. One method is to use the IRS Tax Withholding Estimator, an online tool that helps determine the appropriate withholding amount by considering all income sources. It is useful for complex situations, including self-employment income, and it does not require sensitive personal information. Alternatively, individuals can utilize the “Multiple Jobs Worksheet” on page 3 of the W-4.

When using the worksheet, complete it for the highest-paying job and then apply the calculated additional withholding to that job’s W-4, leaving other jobs with a simpler W-4 setup. Another option for two jobs with similar pay is to check a box on both W-4s indicating multiple jobs, which simplifies the withholding but may split the standard deduction. The goal of these adjustments is to align the amount withheld more closely with the actual tax liability, minimizing owing a large amount or receiving a large refund, which effectively means giving the government an interest-free loan.

Other Tax Obligations for Multiple Jobholders

Beyond federal income tax withholding, individuals with multiple jobs have other tax considerations. Social Security and Medicare taxes, collectively known as FICA taxes, are payroll taxes. The Social Security tax has a wage base limit; earnings above a certain annual threshold are not taxed. For example, in 2025, the Social Security wage base is $176,100. If an individual’s combined wages from multiple employers exceed this limit, they may initially overpay Social Security tax because each employer independently withholds up to the wage base. This overpaid amount is refunded when filing the annual tax return.

There is no wage limit for Medicare tax; all covered wages are subject to this tax. An additional Medicare tax of 0.9% applies to wages exceeding thresholds, such as $200,000 for single filers, with employers responsible for withholding this additional amount once an employee’s wages exceed $200,000. State and local tax rules vary. Individuals with multiple jobs should understand how their combined income might impact their state and local tax obligations, as withholding rules can differ from federal guidelines.

If adjusting W-4s might not be sufficient to cover the total tax liability, individuals may need to make quarterly estimated tax payments using Form 1040-ES. This is relevant for those with significant income not subject to withholding, like self-employment income, or substantial prior under-withholding. Failure to pay enough tax through withholding or estimated payments can result in underpayment penalties. Taxpayers can avoid this penalty if they owe less than $1,000 after subtracting withholdings and credits, or if they paid at least 90% of the current year’s tax liability or 100% of the prior year’s tax liability, whichever is smaller.

Filing Your Tax Return with Multiple Jobs

Individuals with multiple jobs will receive a separate Form W-2 from each employer. Gather all W-2 forms, typically by the end of January, as each details income earned and taxes withheld. The IRS requires all income sources to be reported on a single federal tax return, Form 1040.

Tax preparation software or a tax professional can simplify entering multiple W-2s, as these tools are designed to combine income and withholding accurately. The total income from all jobs is aggregated on the Form 1040 to calculate the overall tax liability. After accounting for income and withholdings, individuals will either owe additional taxes if not enough was withheld, or they will receive a refund if too much was paid. The final tax outcome depends on how effectively withholding or estimated payments covered the total tax burden.