# Grossed Up State Savings Rates - Comparable Tax Rate



## Lightning (4 Nov 2016)

I'm trying to work out the updated grossed up comparable State Savings rates in light of the DIRT changes. 

The DIRT rate is currently 41%. 
The DIRT rate for 2017 will be 39%.  
The DIRT rate for 2018 has been pre-announced at 37%. 
The DIRT rate for 2019 has been pre-announced at 35%. 
The DIRT rate for 2020 has been pre-announced at 33%. 
(A small number of people pay PRSI on top of DIRT if they have unearned income of 5K+ per year). 

What is the correct tax rate to calculate grossed up State Savings rates against? i.e. What would a normal deposit account need to be paying to match State Savings rates? 

Most normal term deposit accounts pay interest on maturity date. 

Hence, would I would think that:
The 3 year rate should be compared to a tax rate of 35%. Meaning a grossed up rate of aprox. 0.51%. 
The 4 year rate should be compared to a tax rate of 33%. Meaning a grossed up rate of aprox. 0.75%. 
The 5 year rate should be compared to a tax rate of 33%. Meaning a grossed up rate of aprox. 1.46%. 
The 10 year rate should be compared to a tax rate of 33%. Meaning a grossed up rate of aprox. 2.24%. 

Any thoughts on the above approach?


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## Sarenco (4 Nov 2016)

Hi Ciaran

I think that looks like a sensible approach.

However, I think it would be helpful if you could continue to also give a grossed up rate that is inclusive of PRSI - I wouldn't be so sure that it's only a small number of people that have to pay PRSI on top of DIRT.


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## Lightning (4 Nov 2016)

Thanks. Fair point, I will continue to include a grossed up rate that is inclusive of a 4% PRSI rate. Cheers.


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## dub_nerd (4 Nov 2016)

Looks right to me.


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## Lightning (5 Nov 2016)

Thanks. I have updated the grossed up rates in the best buy thread.


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## Sarenco (10 Oct 2017)

Hi Ciaran

The anticipated DIRT change for 2018 doesn't appear to have materialised today, which I guess mucks up your grossed up rates for State Savings products in the "Best Buys" section.  

Maybe it makes sense to wait to see if the pre-announced change makes it into the Finance Bill?


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## RedOnion (10 Oct 2017)

It was already fully legislated for in the finance act 2016.

Edit: added link
http://www.irishstatutebook.ie/eli/2016/act/18/section/21/enacted/en/html


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## Sarenco (10 Oct 2017)

Ah, I relied on an IT report - I should have checked myself.


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## Lightning (11 Oct 2017)

@RedOnion - Thanks for the confirmation.


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