A dual beam magneto-optical setup employing a dual axis photoelastic modulator (PEM) and an intensity-stabilized laser was designed and constructed. The beam transmitted through or reflected of the sample is split by a Wollaston prism into two orthogonal high-quality linearly polarized beams. Two photodetectors are used to measure the DC and 2ω components of each beam’s intensity. Theoretical calculations using Jones matrices show that the difference between the 2ω signals, i.e., ΔI2ω, is linearly proportional to the Kerr or Faraday rotation of the sample. Different from I2ω of a traditional single beam setup, the ΔI2ω does not contain an offset caused by the Fabry Perot interference in the PEM’s optical head, making the setup less sensitive for small sample movements and laser drifts including intensity, wavelength, and beam direction drifts all originating from mainly temperature fluctuations in the lab.