Single income - double income

stoneill

Is this correct:

A single income couple moves to the higher tax rate one over €41,800.
A married couple with two incomes moves to the higher rate on income above €65,600.

Does this means one income family with the spouse staying at home to mind the kids pays more tax?

namenotavailablE

Yes- a single income couple (gross income of €65600) with a stay-at-home-spouse minding children will net €46972 in 2011.

Conversely, where both work (higher earner on €41800 and lower earner on €23800), the combined net will be €53755 (€34738 + €19018 if the higher earner receives the absolute maximum possible tax credits, otherwise the net income split varies but the net overall amount remains the same).

This is a difference of €6783 and is the impact of individualisation of the tax system- it's computed as follows:

1. The dual-income couple benefit from the higher overall SRCOP by saving 21% tax [41% -20%] on €23800 (€4998).
2. They also get higher tax credits as the 'home carer' credit is worth €810 whereas the employee credit is worth €1650 (an additional benefit to the dual income couple of €840).
3. Finally, the single income couple loses out as a result of paying a higher amount of PRSI/Universal Social charge compared to the dual income couple- €6270 as compared to €5325 (a benefit of €945 to the dual income couple).

The sum of these 3 benefits in favour of the dual income couple total €6783.

Source: My spreadsheet at [URL]http://taxcalc.eu/monthlyss[/URL]

sled driver

And just for balance, worst of all is the single person (again, gross income of €65,600) who will only net €42,622.