Enter two incomes. Whether one parent is weighing leaving or a job already ended in a layoff, see what each path does to your household’s take-home, month to month — with correct 2026 tax math and every number cited.
This is a financial picture, not a complete one. A few things the numbers cannot measure but that families weigh anyway:
Time with young children is a non-monetary good. Years 0 to 5 are short and not replaceable. Some parents value being present for those years independent of the financial math; others find that working makes them better parents. Neither preference is wrong, and the calculator takes no position.
The career penalty is an average, and most parents don’t return the way the model assumes. The research finds a long-run earnings reduction around 31% for US women who have a first child, and roughly a 5%-per-year-out wage haircut on return. But Hersch (2013) found that among women with elite education, only about 35% return to full-time work at all. The default here is a part-time return at 70% of the prior wage because that is the modal pattern in the data, not because it is a recommendation. Your own re-entry path depends on field, employer, network, and timing in ways no average captures.
Health insurance can decide the whole question. If the leaving parent’s employer covered the family cheaply and the other’s doesn’t, replacement coverage can cost more than every other line item combined. Enter your real premium in “Adjust assumptions” — the default is only a population average.
Single-parent and non-traditional households. This assumes a two-adult household. Single parents, multi-generational households, and families with highly variable income (self-employed, commission, equity) face a different math the framework here doesn’t capture well.
If this was a layoff, not a choice. Most tools — including the methodology this one is built on — assume you chose to leave. Many people didn’t. A layoff doesn’t change the long-run math, but it adds a bridge: severance (taxed at your marginal rate, not the 22% withheld), unemployment (capped by state law — for a high earner it replaces only a small share, and only about 26 weeks in Washington), and replacement health coverage (COBRA is the full family premium, not your old paycheck deduction; the ACA marketplace may cost far less at a one-income income). Whether severance delays unemployment is state-specific. This tool models the bridge as a bounded one-time adjustment and points you to where to confirm the parts it can’t compute.
2026 federal brackets, marginal-stack — the income that disappears is taxed at the household’s highest rate, not a flat average. $7,500 dependent-care FSA. Lost 401(k) match, compounded. A career re-entry penalty you can set. Every figure traces to a public source; defaults are research-grounded and editable. Modeled on the Center for American Progress career-interruption methodology (Madowitz, Rowell & Hamm, 2016).
Federal income tax (2026). Brackets and the $32,200 MFJ / $16,100 Single standard deduction are from IRS Revenue Procedure 2025-32 (OBBBA-permanent TCJA structure). The income that disappears is removed from the top of the joint return — total tax is recomputed at the new lower household income and the difference taken. A single average rate would understate the tax cost of the second income.
FICA. Social Security 6.2% to the 2026 cap of $184,500, Medicare 1.45% uncapped (SSA 2026 COLA; IRS Pub 926).
Dependent Care FSA. 2026 limit $7,500 MFJ, raised from $5,000 by the OBBBA (IRS Pub 15-B). Pre-tax against federal income tax and FICA, valued at the household’s marginal rate. Both parents must work.
Child & Dependent Care Tax Credit. 20%–50% of up to $3,000 (one child) / $6,000 (two or more), phasing down by AGI post-OBBBA (IRS Topic 602). Requires two working parents. DC-FSA applied first, then CDCTC on remaining expenses. Final post-OBBBA slope guidance is pending, so the rate is a disclosed step function (50% low AGI, 35% middle, 20% above the OBBBA threshold).
Child Tax Credit. $2,200 per child under 17 for 2026, OBBBA-permanent, phasing out above $400,000 MFJ MAGI. Applies to both scenarios unless the working household crosses the phase-out.
Employer 401(k) match. Default 4% of pay, the median in Vanguard’s “How America Saves 2025.” Forgone match compounds at the chosen real return (default 4%, the CAP assumption) to age 65. Vested portion is editable.
Family health insurance. Default employee share $6,850/yr (KFF 2025 Employer Health Benefits Survey, family coverage). Replacement cost in the stay-home scenario depends on the new coverage source and should be entered directly — it can dominate the result.
Career re-entry penalty. Adjustable (conservative 3% / central 5% / aggressive 7% per year out) because the literature varies by occupation and decade. Anchored on Madowitz, Rowell & Hamm (CAP, 2016); Kleven et al. (2019); Bertrand, Goldin & Katz (2010); Hersch (2013).
Layoff bridge. Severance is not required by law and is ordinary taxable wages (the 22%/37% on a pay stub are withholding rates, not the tax) — it is taxed here at the household’s marginal rate and is subject to FICA (US DOL FLSA Advisor; IRS Pub 15 / 15-T). Unemployment eligibility, amount, and duration are set by state law; the standard maximum is 26 weeks and benefits are capped at a state maximum (Washington 2026: $366–$1,152/week), so for a high second income UI replaces only a small share; UI is federally taxable, and Washington has no state income tax (US DOL ETA; WA ESD; IRS; WA DOR). Whether severance delays or reduces unemployment is state-specific (in Washington, WAC 192-190-045/050). COBRA continues the same plan at up to 102% of the full premium for up to 18 months for a layoff — realistically the full family premium (KFF 2025 ≈ $26,993/yr ×1.02), not the prior paycheck deduction; the ACA marketplace is a 60-day Special-Enrollment option whose premium tax credit scales with one-income household income and is not computed here (US DOL EBSA; KFF 2025; HealthCare.gov/CMS; IRS PTC). The calculator does not compute exact state UI entitlement, the severance–UI interaction, or ACA subsidies — those are disclosed as state- and situation-specific.
Not modeled. State and local income tax (federal only); self-employment / variable / equity income; HSA, employer life and disability insurance; Social Security earnings-record effects of the gap; childcare price variation across providers; multi-child birth sequencing. If these are material to you, the number is incomplete.
Something missing that shaped your family’s decision? Tell me what to add — a person reads it, and the model improves when people who’ve made this decision say what was missing.
Informational only — not financial, tax, or legal advice. Estimates built from the cited public data; your situation will differ. For decisions that affect your finances, consult a licensed planner, CPA, or attorney. Shortlist is not a financial advisor.
Figures current as of the 2026 tax year. Last updated 2026-05-17.