Tax credit and Band Rate - what's this?

maniootek

Hi guys.
I just want to ask what is tax credit and band rate? Can you explain and give me some examples of usage?

relax carry on

maniootek wrote: »

Hi guys.
I just want to ask what is tax credit and band rate? Can you explain and give me some examples of usage?

They are the two components of the income tax regime. Rate band is the percentage of tax applied to your earnings up to a specific amount (20% up to 32800 euro and 41% afterwards)
Tax credits are the second component which are deducted from the gross amount of tax worked out using your rate bands. This then gives the actual amount of tax you pay.
The link below explains more and provides examples.


http://www.revenue.ie/en/personal/faqs/how-do-i-work-out-my-tax.html

maniootek

relax carry on wrote: »

They are the two components of the income tax regime. Rate band is the percentage of tax applied to your earnings up to a specific amount (20% up to 32800 euro and 41% afterwards)
Tax credits are the second component which are deducted from the gross amount of tax worked out using your rate bands. This then gives the actual amount of tax you pay.
The link below explains more and provides examples.


http://www.revenue.ie/en/personal/faqs/how-do-i-work-out-my-tax.html

How could I miss that
Thank you for explain and for examples.

maniootek

What about USC? This is not included for tax credit/rate bands ?

Example:
Gross pay weekly: € 315.61
USC Rate Band Weekly 2% € 193.00
4% € 115.00
Income over € 16,016 in this employment is chargeable at 7%

USC deducted: € 9.00

Can you explain this?

angeldelight

Universal Social Charge & PRSI are separate to income tax - USC replaced the health levy.

maniootek

I think I know:
€193,00 * 2% = €3,86
€115,00 * 4% = €4,60
€315,61 - €115,00 - €193,00 = €7,61
€7,61 * 7% = €0,5327
total: €3,86+€4,60+€0,5327 = €8,9927 ~€9.00

maniootek

So tax credits and rate bands are related to PAYE only?

srsly78

PAYE is a general term encompassing all deductions made on an ongoing basis.

Income tax is probably what you meant. Yes tax credits and bands only apply to income tax. USC and PRSI have their own seperate rules.

nacho66

The 20% rate band is now 32800? It's less than an average pay in Ireland, isn't?

Kristopherus

nacho66 wrote: »

The 20% rate band is now 32800? It's less than an average pay in Ireland, isn't?

What is average pay in Ireland?

nacho66

Actually no, it's just below the band according to this http://en.wikipedia.org/wiki/List_of_countries_in_Europe_by_monthly_average_wage

Geuze

Kristopherus wrote: »

What is average pay in Ireland?

http://www.cso.ie/en/statistics/earnings/


Average earnings are 21.40 per hour, or 675 per week.

http://www.cso.ie/en/releasesandpublications/er/elcq/earningsandlabourcostsq22013finalq32013preliminaryestimates/#.UvQSumJ_uE4

That's 35,100 per year.