# Key Post: PRSI Explained - 2008 version



## Brendan Burgess

This is Ireland’s most complicated tax. I think I have it right, but I am open to correction. You can read the Department of Social Welfare's PDF here or their Employers Guide.

The Department of Social Welfare has a calculator  on its site. This link is for 2007 and will be updated when the 2008 version is published.

This post covers only Class A employees i.e. most private sector employees. 

The generic name is PRSI which is comprised of
A Social Insurance Contribution and
A Health Contribution 

_Note: All the figures given here are for those paid weekly. For those paid monthly, different figures apply. If someone wants to reproduce this post with the monthly figures, that would be a great help._


*If your salary is less than €352 in any week*
You pay nothing

*If your salary is between €352.01 and €500 in any** week*
First €127: 0% (Employee’s PRSI-Free Allowance)
Balance: 4%

*If your salary is over €500 in any** week*
First €127: 0%
Balance: 6%

(If your earnings for the year are less than €26,000, you will be able to apply for a refund of any Health Levy paid. You pay the Health Levy of 2% in any week, where your earnings are over €500) 

*Earnings over €50,700 per annum*
First €127 per week: 2%
> €127.01 6% 
When your annual earnings exceed €50,700 the rate drops to 2%
However, if your weekly earnings exceed €1,925 at any time, you pay either 6.5% or 2.5%

(If your weekly earnings exceed €1,925 you will pay the additional .5% Health Levy. However, at the end of the year you will be entitled to a refund, if your total salary is less than €100,100)




*Another way of looking at it just to confuse you*
The PRSI contribution of 4% is payable on all income over €127 per week up to a ceiling of €50,700 annually.

The Health Levy of 2% is payable on all income in excess of €500 per week up to €1,952
And 2.5% on incomes above that. 

*Clarifications and complications:*
PRSI/Health Levy is calculated on the weekly or monthly pay. So if you are paid €351 one week and €1,000 the next, the €351 is exempt from PRSI as it is below €352 whereas you pay 6% on the €1,000.


PRSI/Health Levy is cumulative in the sense that if you earn over €50,700 in any year the rate is reduced to 2% 

*Subclass A2 *who earn more than €500 per week pay 4% up to €50,700 and nothing on the balance i.e. they pay no Health Levy
( medical card holders and people getting a social welfare Widow's Widower's, Pension, One-Parent Family Payment or Deserted Wife's Benefit Or Allowance)


*Weekly pay *is the employee's money pay plus notional pay (if applicable).

*EMPLOYERS PRSI ( No change since 2005) *

10.75% on the whole salary except:

For salaries up to €356 per week( €1543 per month), the rate is 8.5% of the whole salary


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## Caveat

*Re: PRSI Explained*



Brendan said:


> *If your salary is less than €352 in any week*
> 
> *If your salary is between €352.01 and €500 in any** week*
> 
> 
> *If your salary is over €500 in any** week*


 
Maybe I've missed something Brendan but just to clarify, are these figures _gross_ or after tax?


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## Brendan Burgess

*Re: PRSI Explained*

Prsi is calculated on the Gross *taxable *salary - e.g. gross less pension contributions that qualify for tax and PRSI/health levy relief.


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## bb12

*Re: PRSI Explained*

sorry, but am still confused about this.. 

i'd be in the earning >  500 and < 1925 per week category...so do i just calculate the first €127 at 2% and then the balance at 6%? 

but where does the 50700 threshold come into it?


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## tax123

*Re: PRSI Explained*



Brendan said:


> The Health Levy of 2% is payable on all income in excess of €500 per week up to €1,952



It might be cleared to say:

Health Levy is not payable if you earn less than €500 a week.
But if you earn greater than €500 a week, the full amount of your income is subject to Health Levy at 2%, up to the €1,952 tax band.

An annualised example:
If you earn €25,999, health levy = 0
If you earn €26,001, health levy = €500


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## Brendan Burgess

*Re: PRSI Explained*



bb12 said:


> sorry, but am still confused about this..
> 
> i'd be in the earning >  500 and < 1925 per week category...so do i just calculate the first €127 at 2% and then the balance at 6%?
> 
> but where does the 50700 threshold come into it?



No need to apologise, it is very confusing. Many of the Budget Commentaries in the press and from the accountancy firms make small errors in it.

*If your salary is over €500 in any** week*
First €127: 2%
€127.01 to €1925: 6%
Balance::6.5%

So if you earn €1,000

127@2% = 2.54
873@6% =52.38
Total: 54.92

They are weekly thresholds, but when your earnings excedds 50,700 in any year, the total rate is reduced to 2% (i.e. they stop charging the 4% social insurance contribution)


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## tax123

*Re: PRSI Explained*

I stand to be corrected on this, but i think the essence is that Health Levy is paid if you earn more than €500 a week in the pay period, but is only payable if you earned greater than €26,000 in the year.

so if you work 20 weeks @ €600 = €12,000,
You will have paid Health levy of €240, as you earned more than €500 a week.

but you are below the annual threshold of €26,000, so you are due a refund of this amount.


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## Nomansland

*Re: PRSI Explained*

Hi Noman

I have reprhased it. 

It is almost impossible to explain because of the interaction of weekly and annual thresholds.

Do you understand it now?


Brendan


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## ClubMan

*Re: PRSI Explained*



Brendan said:


> *If your salary is between €352.01 and €500 in any** week*
> First €127: 0% (Employee’s PRSI-Free Allowance)
> Balance: 4%
> 
> *...
> 
> * *Earnings over €50,700 per annum*
> First €127 per week: 2%
> > €127.01 6%
> 
> ...
> 
> *Another way of looking at it just to confuse you*
> The PRSI contribution of 4% is payable on all income over €127 per week up to a ceiling of €50,700 annually.



This is not 100% correct. If you are paid weekly then the employee _PRSI _free allowance is €127 p.w. (€6,604 p.a.) but if you are paid monthly it's €551 p.m. (€6,612 p.a). I've had at least one experience with an employer's accountant getting this wrong and multiplying €127 x 4 for monthly salary etc. I guess I've met another accountant here who doesn't know the rules.


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## Brendan Burgess

*Re: PRSI Explained*



> This is not 100% correct. If you are paid weekly then the employee _PRSI _free allowance is €127 p.w. (€6,604 p.a.) but if you are paid monthly it's €551 p.m. (€6,612 p.a). I've had at least one experience with an employer's accountant getting this wrong and multiplying €127 x 4 for monthly salary etc.


 
I thought it was clear that all of the above figures are assuming that people are weekly paid. I have put in a note to this effect. 

I have left out the monthly figures as it's complicated enough with one set of figures.


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## ClubMan

*Re: PRSI Explained*



Brendan said:


> I thought it was clear that all of the above figures are assuming that people are weekly paid.


It wasn't clear to me!


> I have put in a note to this effect.


 This is still wrong


> _Note: All the figures given here are for those paid weekly. If you are paid monthly, the monthly figure is got by multiplying by 52 and divding by 12. _


 At least this is not correct for the weekly/monthly _PRSI _"exemption" of €127/€551 since the annual figures are €6,604/€6,612 respectively.


> I have left out the monthly figures as it's complicated enough with one set of figures.


 I thought that the point of the thread was to tackle the complexity of _PRSI _head on!?


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## spinal_tap

*Re: PRSI Explained*

I've read this thread twice and am still confused (but must admit I always have been by PRSI!), so can somebody tell me how much PRSI I will be earning €53k per year and being paid weekly.

Also, is this an increase/decrease on what I have been paying?

Thanks,
Confused


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## ClubMan

*Re: PRSI Explained*

www.taxcalc.eu ?

€53K p.a. is €1019 p.w. (rounded for simplicity)
This means €127 @ 2% (health contribution) = €2.54
€1019 - €127 = €892 @ 6% (_PRSI _+ health contribution) = €53.52
Total _PRSI_/health contribution =    €56 p.w.
Except in the last few (three?) weeks of the year when you will have exceeded the €50,700 employer _PRSI _ceiling and will stop paying 4% _PRSI _on anything above that.


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## Brendan Burgess

*Re: PRSI Explained*



> I thought that the point of the thread was to tackle the complexity of _PRSI _head on!?


 
Absolutely not. I am not trying to tackle complexity.

I am trying to simplify and explain it for the vast majority of people. 

Brendan


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## Brendan Burgess

*Re: PRSI Explained*

I have moved the bit about claiming refunds into a new thread here:

http://www.askaboutmoney.com/showthread.php?t=69727

I think that this is very important and maybe Askaboutmoney could highlight this in January and flood the Revenue with claims. It might encourage the Minister to simplify the system.

Brendan


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## spinal_tap

*Re: PRSI Explained*



ClubMan said:


> www.taxcalc.eu ?
> 
> €53K p.a. is €1019 p.w. (rounded for simplicity)
> This means €127 @ 2% (health contribution) = €2.54
> €1019 - €127 = €892 @ 6% (_PRSI _+ health contribution) = €53.52
> Total _PRSI_/health contribution =    €56 p.w.
> Except in the last few (three?) weeks of the year when you will have exceeded the €50,700 employer _PRSI _ceiling and will stop paying 4% _PRSI _on anything above that.



Thanks .... using Mac OS9 at work, and Karl's calculators don't work on it.


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## ClubMan

*Re: PRSI Explained*



Brendan said:


> I have moved the bit about claiming refunds into a new thread here:
> 
> http://www.askaboutmoney.com/showthread.php?t=69727
> 
> I think that this is very important and maybe Askaboutmoney could highlight this in January and flood the Revenue with claims. It might encourage the Minister to simplify the system.
> 
> Brendan


I would imagine that the number of people who qualify for _PRSI_/health levy refunds would be limited - particularly among _AAM _users.


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## ClubMan

*Re: PRSI Explained*



spinal_tap said:


> Thanks .... using Mac OS9 at work, and Karl's calculators don't work on it.


Odd - it's _Java _based so should work on any platform.


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## z107

*Re: PRSI Explained*



> At least this is not correct for the weekly/monthly _PRSI _"exemption" of €127/€551 since the annual figures are €6,604/€6,612 respectively.



I would suggest that the €551 is just a rounded figure, used to make the calculations slightly easier (€551 instead of €550.333...) When you throw 'insurable weeks' into the mix, you can see that the monthly calculation is a bit of a shoe-horn.

I doubt the welfare wish to discriminate between monthly and weekly paid people.



> I am trying to simplify and explain it for the vast majority of people.



You certainly have your work cut out for you. Remember  as well that we are only dealing with Class 'A' here.


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## spinal_tap

*Re: PRSI Explained*



ClubMan said:


> Odd - it's _Java _based so should work on any platform.



Sorry for going O.T. Nope ... all I get is his page explaining the calculator. Scripting problems are very common on OS9, and have crippled dozens of sites at this stage, although there always were problems with many sites not running properly on Mac.


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## Karl Grabe

*Re: PRSI Explained*



spinal_tap said:


> Thanks .... using Mac OS9 at work, and Karl's calculators don't work on it.



hmmm. is that power PC?
It should work on OS X with safari


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## spinal_tap

*Re: PRSI Explained*

No Karl, eMac and iMac using OS 9.2.2 and IE 5 ... can't upgrade to OSX for another few months due to software compatibility problems.


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## ClubMan

*Re: PRSI Explained*



umop3p!sdn said:


> I would suggest that the €551 is just a rounded figure, used to make the calculations slightly easier (€551 instead of €550.333...)
> 
> ...
> 
> I doubt the welfare wish to discriminate between monthly and weekly paid people.


Good point - I never noticed that!


> You certainly have your work cut out for you. Remember  as well that we are only dealing with Class 'A' here.


Indeed - and have we even covered all Class A possibilities here?


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## bb12

*Re: PRSI Explained*

thanks for all the info everyone. have just realised that i've been overcharged for my prsi all year long, so will be looking for a refund!


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## Karl Grabe

*Re: PRSI Explained*



ClubMan said:


> Good point - I never noticed that!
> 
> Indeed - and have we even covered all Class A possibilities here?



I don't suppose trying to capture all of this in a flowchart would make any sense? Would make writing sofware to calculate prsi allot easier!


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## Brendan Burgess

*Re: PRSI Explained*

Karl

That is a great idea. 

Maybe we will have a competition "The Askaboutmoney make sense of PRSI" competition.

Now what would a suitable prize be? 

Brendan


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## ClubMan

*Re: PRSI Explained*



Brendan said:


> Now what would a suitable prize be?


A T shirt perhaps?


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## Karl Grabe

*Re: PRSI Explained*



ClubMan said:


> A T shirt perhaps?



yes!, and maybe with the AAM PRSI flowchart printed ([broken link removed]?)  
on it - although it probaby wouldn't all fit! 

We could even sell them afterwards - proceed to AAM, of course!


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## busymam

*Re: PRSI Explained*

PRSI is not really that complicated  

Here's a very useful link to check if you're paying the correct PRSI. 

http://www.welfare.ie/calculators/prsi_calc_07.html

Hope this helps


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## tax123

*Re: PRSI Explained*

That's a great link - I had no idea it was there

Thanks a million Busymam!


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## Brendan Burgess

*Re: PRSI Explained*

I have added the link to the First Post.

Can someone reply when the calculator is out for 2008.

Brendan


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## busymam

*Re: PRSI Explained*

There's another publication that deals with calculation of PRSI. It's called the PRSI Ready Reckoner and it covers the most common classes of PRSI and unlike the online calculator it also covers income over the present threshold of €48,800. This is the one for 2007.

http://www.welfare.ie/publications/prsi1_07.pdf

The latest versions of these should be available soon.

Hope this helps to demystify PRSI and doesn't cause more confusion


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## Karl Grabe

*Re: PRSI Explained*



Brendan said:


> Karl
> 
> That is a great idea.
> 
> Maybe we will have a competition "The Askaboutmoney make sense of PRSI" competition.
> 
> Now what would a suitable prize be?
> 
> Brendan


... or aam members could collaborate to put it together. I tried the following online tool:
[broken link removed]

with this tool Collaborators would have to supply an email address to the document owner which may not be practical.


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## Brendan Burgess

*Re: PRSI Explained*

Busyman said:



> unlike the online calculator it also covers income over the present threshold of €48,800.



You are not serious! The Department's calculator cannot handle salaries over €48,800?

I put in a salary of €2,000 per week, and I got a result which looks right, but it's only right if that is my first salary of the year. It would be wrong, if I had already earned €50,000! 

It shows how complex it is.

Brendan


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## Nomansland

*Re: PRSI Explained*

Thanks Brendan for explaining this. I have a better understanding of it now but its still a fair complicated system.


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## Guest127

*Re: PRSI Explained*

the threshold next year for the health levy is €26,000 or €500 per week. say your employer paid you €400 for 40 weeks = €16000 (prsi deducted but no health levy) and in a mood of governmental generosity €1,000 for the next 12 weeks - €12,000. ( prsi deducted now includes health levy) total earnings for the year €28,000. but you only paid health levy contribution on €12,000 (€240). If your employer had paid you the €28,000 evenly over the whole year you would have paid €560 health levy. I understand from above posts that if your earnings over the whole year are under €26,000 and you were paid over €500 in any one week that any  health levy paid by you can be reclaimed but in above case is the opposite also applicable ie  do you owe  the €320 or does the fact that you were not liable on a weekly basis for the levy in the 40 weeks mean that you do not owe the €320?


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## z107

*Re: PRSI Explained*

Cuchulainn, no you shouldn't owe the money. (But don't take my word for it!)

Depending on the 'spread' of PRSI payments throughout the year, two different people with the same annual gross pay can end up paying differents amounts of PRSI.


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## Guest127

*Re: PRSI Explained*

thanks UMO. I actually pity anyone trying to understand prsi and the health levy. its as clear as mud, and taxes ( and thats what prsi and the health levy are) should be transparant and fair.


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## eileen alana

*Re: PRSI Explained*



Brendan said:


> I have added the link to the First Post.
> 
> Can someone reply when the calculator is out for 2008.
> 
> Brendan


 

here it is: http://www.welfare.ie/calculators/prsi_calc_08.html


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## helpPlease

*Re: PRSI Explained*



Brendan said:


> Prsi is calculated on the Gross *taxable *salary - e.g. gross less pension contributions that qualify for tax and PRSI/health levy relief.


duplicate post


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## helpPlease

*Re: PRSI Explained*



Brendan said:


> Prsi is calculated on the Gross *taxable *salary - e.g. gross less pension contributions that qualify for tax and PRSI/health levy relief.


 

i get health care of €52.93 a month.... is this BIK added to my gross salary and then PRSI is calculated on that total amount?

thanks


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## ClubMan

Yes. If your employer is paying private health insurance premiums on your behalf then they should be subject to tax and _PRSI_/health contribution deductions via payroll. In that case you are also still entitled to claim a tax credit in respect of the gross premiums. See here:

[broken link removed]


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## larry wisely

The 2% health levy, does this levy cease when you retire at 65?


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## justsally

larry wisely said:


> The 2% health levy, does this levy cease when you retire at 65?


 
no, the health levy is usually payable up to 70 years of age.    Taken from Citizens Advice site:-

People between the ages of 16 and 70 may have to pay the Health Levy. Employed people with income of €480 or less in any week are exempt from the contribution in that week. This is currently 2% if their income is over a certain amount - €480 (January 2007) per week. The rate is 2% on earnings above €100,100 a year. Self-employed people with income of €24,960 or less per annum are exempt from the Health Levy. Anyone over the exemption limits is liable to pay the Health Levy on all of their income. Income from social welfare payments is ignored in calculating your income for the Health Contribution.
A number of groups do not have to pay the Health Levy:

Everyone aged 70 or over
Medical Card holders (including those who have Medical Cards exclusively because of EU regulations or because they are aged 70 or over)
People who are getting Widow's/Widower's Pension, a One-Parent Family Payment or Deserted Wife's Allowance from the Department of Social and Family Affairs or a widow's pension from an EU country.


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## Brendan Burgess

Bump for editing purposes


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## Trayback

*Re: PRSI Explained*

Hi There,  I am a newby to askaboutmoney.  I wanted to find out some information in relation to the Income Levy and the Health Levy.  I am a temp working for a recruitment agency.  I am a full medical card holder so can someone confirm that I am not subject to either the Income or Health Levy? And can i claim back monies I have paid since I first received my medical card (nearly three years ago). My wages also got docked 8% in line with public sector pension levy recently so I am hoping someone has some good news for me!!

Thanks

Teresa


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