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THIS YEAR’S BUDGET contained a number of tax changes that will mean an increase in the take home pay of workers at different levels.
Finance Minister Paschal Donohoe announced a reduction in one of the USC rates, an increase in the ceiling on the standard rate of income tax and the increase in a number of tax credits.
So, using our Budget Calculator, let’s take a look at what this means for someone earning €30,000.
If you’re single and earning €40,000 you are going to benefit from reductions in your tax obligations on both Income Tax and the Universal Social Charge.
The entry point for the higher rate of Income Tax is being increased from €34,550 to €35,300, so people earning €40,000 are going to pay less tax at the higher rate.
So here’s how your Income Tax payments will play out compared to 2018:
This means that workers earning €40,000 will pay Income Tax of €8,940, a saving of €150 on last year.
On Income Tax your annual saving is €150
But PAYE workers also pay taxes in the form of the Universal Social Charge (USC).
The ceiling on the second rate of USC is being increased by €502 to €19,874 and the third rate of the USC is to be reduced from 4.75% to 4.5%.
So here’s how your USC tax payments will play out compared to 2018:
This is a total annual USC payment of €1,123, a reduction of €64 on 2018.
On USC your annual saving is: €64
Overall tax saving: €214
If you are self-employed and currently earning €40,000, you will benefit from the same savings as above.
However, Donohoe also announced an increase in the Earned Income Credit from €1,150 to €1,350.
This will result in an additional saving for self-employed workers of €200 per year.
Overall saving: €414
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€4 a week. What will I spend it on.
@Paul: Diesel
@Paul: I don’t begrudge those on the short term unemployment benefits, or the state pension recipients. But it’s crazy to think that those that get out of bed and earn a crust, are €1 less off compared to those on long term unemployment benefits!!!..
Again Fine Gael playing to their 28%. Get interesting when a chunk of that 28% s kids really can’t start families of their own despite equity release from their parents property. Not too far off now.
It’s something I suppose!!
@Annette: Better than a poke in the eye Annette
@Johnny Mason: Depends who and what is doing the poking
@Annette: What are you gonna spend the €4 per week extra on? Don’t go wild now..show some decorum!
@Annette: there’s a poking joke in there somewhere but meto and all that ill let it ly.
@Annette: Behave Annette or things may get x rated
The money would have been far better spent on a social housing projects country wide. instead of this pittance across the board.
Surely the self employed bit is not a saving of €200 per say, it’s raising the amount you don’t have to pay tax on. It’s like saying everyone on the higher rate is €750 better off because they raised the band, which is obviously not the case.
Stand to be corrected if I’m misreading it?
@Susiebee: There is a difference between a credit increase and a band increase.
A band increase raises the amount you pay lower rates of tax on, so yes, in this case a saving of up to 150 less tax (750*(40%-20%)).
Credits, however, are deducted from tax after it is calculated, so every euro extra credit is a euro less tax to pay.
They haven’t changed the standard personal/paye tax credits since the early years of the recession, so I suppose we don’t really think or talk much about their effect on pay.
I think you might looking at them like they are a tax free allowance. Those don’t exist in Ireland these days; it’s now about calculating tax on every cent, and then deducting the credits from the total tax.
in the overall scheme of thing it does not matter a jot
The pint in your photo. It’ll cost that in some small country town, certainly not in Temple Bar.
You Hippocrates only 2% of this country are on the brew
Billions fiddled by white collar crime of the capitalists
Nothing said about them
Disgusting right wing government
have your say