When you start a new job you may wonder how much pay you will actually get into your bank each week. The answer to that depends on the amount of your gross pay, standard rate cut-off point and your tax credits. Most people have three deductions from their pay in Ireland : PAYE, PRSI and USC

PAYE (Pay as you earn)

If you are paid weekly, your income tax is calculated by:

• applying the standard rate of 20% to the income in your weekly rate band
• applying the higher rate of 40% to any income above your weekly rate band
• adding the two amounts above together and
• deducting the amount of your weekly tax credits from this total.

Example:

George is a single person and his standard annual rate cut-off point is €35,300 or €679 per week which means that his pay up to that amount is taxed at 20% and anything over that amount is taxed at 40%. George’s gross weekly pay is €750. George is entitled to an annual personal tax credit of €1650 and a PAYE credit of another €1650. So his weekly tax credit is €63.46. (Just to note that If your yearly income is €8,250 or more you will be entitled to the full PAYE credit of €1650 . If your income is below €8,250 then the amount of the credit is capped at 20% of your yearly income. For example, if your yearly income is €5,000 the credit will be €5,000 @ 20% = €1,000)

George’s PAYE calculation:

€679 x 20% = €135.8

€71 x 40% = €28.4

Gross PAYE €164.2

Less credits €63.46

Total PAYE deduction is €100.74

PRSI (Pay related social insurance)

Most employed people over 16 years of age make social insurance contributions. The amount you pay is based on your earnings and the type of work you do. For this reason it is called Pay Related Social Insurance (PRSI). If you earn over €352 per week, you pay 4% PRSI on all your earnings.

A PRSI credit was introduced in 2016 which reduces the amount of PRSI payable for people earning between €352.01 and €424 per week. The credit is tapered and the amount of the credit depends on your earnings. The maximum credit is €12. For example, if you earn €352.01 per week, you will get the maximum PRSI credit of €12. On these earnings of €352.01, your PRSI charge (calculated at 4% of your earnings) would be €14.08. After the €12 credit is deducted, you will pay PRSI of €2.08. If you earn between €352.01 and €424 per week, the maximum credit of €12 is reduced by one-sixth of the amount of your weekly earnings over €352.01.

Because George earns €750 a week he has to pay 4% PRSI on his full pay which is calculated like this:

€750 x 4% = €30

USC (Universal social charge)

You do not pay the Universal Social Charge if your total income for a year is €13,000 or less. If you are aged 70 or over or a medical card holder aged under 70 and your aggregate income for the year is €60,000 or less, you pay a reduced rate of USC. If your income is greater than the exemption limit of €13,000, you pay USC on your full income.

2019	Rate
First €12,012	0.5%
Next €7,862	2%
Next €50,170	4.5%
Balance	8%

George’s weekly USC liability is calculated like this:

First €231 x 0.5%

Next €151 x 2%

The remaining €368 x 4.5%

USC payable €20.73

Total amount deducted from George’s pay is €151.47 which leaves him with a net weekly pay of €598.53.

I hope this has made it a little bit easier for you to understand your payslip.