Calculation of income tax
You pay tax at the lower of:
- the standard rate calculation
- the marginal rate calculation
The standard rate of tax in Jersey is 20%. This is the maximum personal income tax you will pay in a year.
To protect people on low incomes there are exemption thresholds. If your income is below the exemption threshold you don't pay income tax.
If you have a low income, but it's more than the exemption threshold, you'll pay some tax but it won't be at the maximum rate. Instead we use a calculation so that you pay a small amount of tax that gradually gets higher as your income goes up.
This calculation uses the exemption threshold and a marginal percentage rate of 26%.
We always work out your tax using the marginal calculation, but only tax you using this calculation if the tax works out less than at the standard rate calculation.
The difference between the two calculations is called marginal relief.
If you have a higher income you'll get less marginal relief until you pay tax at the standard rate of 20%, the maximum rate in Jersey.
Extra tax reliefs
Your exemption threshold may also be increased by the following:
- second earners relief
- deduction for children
- additional allowance for children
- child day care relief
- marginal income deduction for interest payments on your home (until 2025)
As your income increases, the amount of your entitlement to marginal relief will reduce until you are paying the maximum 20% income tax rate.
Marginal rate calculation examples
Allowances, reliefs and deductions for income tax
Your annual tax bill
If you are liable to Jersey tax you will receive a tax assessment showing you how your tax has been worked out.
It will include:
- a breakdown of all your income which is liable to tax in Jersey
- any expenses you are entitled to claim against that income
- any allowable pension contributions
- the tax you would pay at the standard rate
- marginal relief calculation (if any)
- your long-term care contribution