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How to break down new salary?

  • 19-06-2025 02:25PM
    #1
    The Davestator
    Registered Users, Registered Users 2 Posts: 3,604 ✭✭✭


    Thanks for any advice

    Post edited by The Davestator on


Best Answer

Answers

  • #2
    BrokenArrows
    Registered Users, Registered Users 2 Posts: 7,537 ✭✭✭BrokenArrows


    The most tax efficient depends on your age. There is a maximum percentage of your income you can contribute to your pension tax free. Whatever category you fall into is the most tax efficient.

    Under 30

    15%

    30-39

    20%

    40-49

    25%

    50-54

    30%

    55-59

    35%

    60 or over

    40%



  • #3
    djan
    Registered Users, Registered Users 2 Posts: 1,964 ✭✭✭djan


    May not be relevant but cosider a higher salary split if looking for a mortgage/loan, as that enables access to a higher amount.

    However, from a purely tax efficiency perspective, put as much as you can into pension and cap salary at your higher income tax band limit.

    Note that employer contributions to pension do not count towards the age limit %.



  • #4
    The Davestator
    Registered Users, Registered Users 2 Posts: 3,604 ✭✭✭The Davestator


    Not looking at a mortgage thankfully. I dont know much about this but I am confused about this;

    If the employer puts in 15k to my pension, that's worth more to me than if I put in 15% of a 100k salary, I think as it's not taxed.



  • #5
    Explosive_Cornflake
    Registered Users, Registered Users 2 Posts: 2,199 ✭✭✭Explosive_Cornflake


    I'll expend further. If you were 36 years old you can make your employee contribution 20%. That's leave you with an 80/20 split.
    BUT, if the company are giving you the option for what they want to set their contribution at you can get creative.
    The most tax efficient thing to do would be to get your gross pay AFTER pension to be just under the higher tax threshold.

    You wouldn't do this, but you could get your employer contribution to be 45k, leaving you 55k, then you pay 20% to your pension.
    Total to pension is 45+11k, and then you'd just pay income tax on the 44k.

    At least that's what I've been told recently by an advisor, the employer contributions are not in the above table.



  • #6
    JVince
    Registered Users, Registered Users 2 Posts: 2,036 ✭✭✭JVince


    I'm guessing in or close to the 40-49 age bracket, so it depends on a lot of things.

    Homeowner?

    If yes, and have a mortgage, mortgage finish date

    Current/future expenses - eg, child heading to university

    Current pension balances?

    Retirement age plan?

    And there are many more.

    At the end of the day, its what you can afford. Every 1% of pension contribution sees about €50 off your monthly net pay, but adds €83 to your pension.

    If you can afford it, max the contributions out and give yourself an opportunity to cut back hours/days as you move towards 60.



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  • #7
    The Davestator
    Registered Users, Registered Users 2 Posts: 3,604 ✭✭✭The Davestator


    Yep, in that age bracket!

    Thanks for all the advice folks.



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