personal income tax changes

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Brendan Burgess

Brendan Burgess

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The 52% rate will be reduced for low and middle earners but we want to maintain the highly progressive system

This will be phased in over three years

Starting today

Increasing entry point for USC to just above €12,000

Increasing second rate to just over €12k

2% USC rate to 1.5%

4% to 3.5%

20% tax band increased by €1,000 to €33,800
Top rate of tax from 41% to 40%

USC being increased to 8% on incomes over €70,000
and 11% for self employed over €100,000

Top rate stays at 52%

Plan is to keep upping the USC on high earners so they can't reduce tax
 
Ok, so does that mean that the USC will be like this?

  • On the first €12,000 = 1.5%
  • On the next €5,980 (which is €12,000 to €17,980) = 3.5%
  • On the next €52,020 (which is €17,980 to €70,000) = 7.0%
  • On the balance (€70,000 +) = 8.0%
 
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20% tax band increased by €100,000 to €33,800 - increase should be 1k.

USC tiers 10k->12k, 16k->min wage- 18k?
presume 8% rate replacing old 7% and is not a new band?
 
So based on the above figures a person on 100K salary would now pay 6,431 in USC as opposed to 6,318 this year.
Would this be correct?
 
Karl Grabe said:
presume 8% rate replacing old 7% and is not a new band?
Click to expand...
I would read it as a fourth band. So (70,000-17,980 = 52,020) @ 7% and the balance above 70K at 8%. Similar in concept to the self-employed 10% which applies on the excess above 100K. And yes 44brendan, I also make that 6,431 in 2015.
 
Here is what they say in the

Summary of Budget 2015 Taxation Measures - Policy Changes

[FONT=&quot]Incomes of €12,012 or less are exempt. Otherwise,[/FONT]
[FONT=&quot]€0 to €12,012 @ 1.5%[/FONT][FONT=&quot][/FONT]
[FONT=&quot]€12,013 to €17,576 @ 3.5%[/FONT][FONT=&quot][/FONT]
[FONT=&quot]€17,577 to €70,044 @ 7%[/FONT][FONT=&quot][/FONT]
[FONT=&quot]€70,044 to €100,000 [/FONT][FONT=&quot]@[/FONT][FONT=&quot]8%[/FONT][FONT=&quot][/FONT]
[FONT=&quot]PAYE income in excess of €100,000 @ 8%[/FONT][FONT=&quot][/FONT]
[FONT=&quot]S[/FONT][FONT=&quot]elf-employed income in excess of €100,000 @ 11%[/FONT]

[FONT=&quot][/FONT][FONT=&quot][/FONT]
[FONT=&quot]Extension of the exemption from the 7% rate of USC[/FONT][FONT=&quot][/FONT]
[FONT=&quot]for medical card holders whose aggregate income does not exceed €60,000, who will now pay a maximum rate of 3.5% USC.[/FONT]
[FONT=&quot]
[/FONT]
[FONT=&quot]Individuals aged 70 years and over whose aggregate income is €60,000 or less will pay a maximum rate of[/FONT][FONT=&quot] 3.5% USC.[/FONT]
 
Also on first glance appears to be a far better deal for the single person on 100K rather than his married brother on the same salary!
 
I think that someone on an income of €50k benefits proportionately more than a person on €100k. So if the brother and his wife are earning €100k between them, they will be better off.
 
Stlll no clear on this

[FONT=&quot]Incomes of €12,012 or less are exempt. Otherwise,[/FONT]
[FONT=&quot]€0 to €12,012 @ 1.5%[/FONT]
[FONT=&quot]€12,013 to €17,576 @ 3.5%[/FONT]
[FONT=&quot]€17,577 to €70,044 @ 7%[/FONT]
[FONT=&quot]€70,044 to €100,000 [/FONT][FONT=&quot]@[/FONT][FONT=&quot]8%[/FONT]
[FONT=&quot]PAYE income in excess of €100,000 @ 8%[/FONT]
[FONT=&quot]S[/FONT][FONT=&quot]elf-employed income in excess of €100,000 @ 11%[/FONT]

Does that mean a person earning 75K will pay 8% on 75K or 8% on the amount exceeding 70K i.e 8% on 5K (75-70k), 7% on the difference between 17,577 and 70,044 and so on

Brendan Burgess said:
Here is what they say in the

Summary of Budget 2015 Taxation Measures - Policy Changes

[FONT=&quot]Incomes of €12,012 or less are exempt. Otherwise,[/FONT]
[FONT=&quot]€0 to €12,012 @ 1.5%[/FONT]
[FONT=&quot]€12,013 to €17,576 @ 3.5%[/FONT]
[FONT=&quot]€17,577 to €70,044 @ 7%[/FONT]
[FONT=&quot]€70,044 to €100,000 [/FONT][FONT=&quot]@[/FONT][FONT=&quot]8%[/FONT]
[FONT=&quot]PAYE income in excess of €100,000 @ 8%[/FONT]
[FONT=&quot]S[/FONT][FONT=&quot]elf-employed income in excess of €100,000 @ 11%[/FONT]


[FONT=&quot]Extension of the exemption from the 7% rate of USC[/FONT]
[FONT=&quot]for medical card holders whose aggregate income does not exceed €60,000, who will now pay a maximum rate of 3.5% USC.[/FONT]
[FONT=&quot]
[/FONT]
[FONT=&quot]Individuals aged 70 years and over whose aggregate income is €60,000 or less will pay a maximum rate of[/FONT][FONT=&quot] 3.5% USC.[/FONT]
Click to expand...
 
Fedupwtbs said:
Does that mean a person earning 75K will pay 8% on 75K or 8% on the amount exceeding 70K i.e 8% on 5K (75-70k), 7% on the difference between 17,577 and 70,044 and so on
Click to expand...
Yes, 8% on the amount exceeding 70K i.e 8% on 5K (75-70k), 7% on the difference between 17,577 and 70,044 and so on.
 
I work out the break even point to be €87464 for people on the 8% rate.
 
Between the income tax drop from 41% to 40%, the various band adjustments and the USC changes, everybody should see a reduced tax/USC/PRSI amount next year. The benefit tops out at the 70K income level (for both married one income and single). For single people, the reduction tops out at €760 pa and for married one income, the reduction tops out at €470.
 
Pension contributions

What about pension contributions for those earning over 70k? Is the tax on pension contributions now higher for this population? i.e. PRSI and USC apply to these payments but get relief from income tax only at 40%? Net effect is 1% more tax. Thanks for your help.
 
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