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Tax threshold question

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  • 31-05-2020 10:27pm
    #1
    scudzilla
    Registered Users Posts: 11,911 ✭✭✭✭


    My cut off point is 44,300 and then onto higher rate, looks like i'll be hitting close to 50k this year, how and when does the higher rate come into play?

    1. As soon as i hit 44300 do i start paying higher rate

    2. Is it averaged out on earnings throughout year?

    Last thing i want is for the final month or so to be hammered, if thats the case i'll start cutting back now


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    #2
    relax carry on
    Registered Users Posts: 4,072 ✭✭✭relax carry on


    scudzilla wrote: »
    My cut off point is 44,300 and then onto higher rate, looks like i'll be hitting close to 50k this year, how and when does the higher rate come into play?

    1. As soon as i hit 44300 do i start paying higher rate

    2. Is it averaged out on earnings throughout year?

    Last thing i want is for the final month or so to be hammered, if thats the case i'll start cutting back now

    Tax is calculated on a cumulative basis so no you won't be hammered in the final month of the year.

    https://www.revenue.ie/en/jobs-and-pensions/calculating-your-income-tax/how-your-income-tax-is-calculated.aspx


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    #3
    lughildanach
    Registered Users Posts: 150 ✭✭lughildanach


    It will depend on whether your income is constant throughout the year, or whether you rely on bonuses or other increases in salary later in the year. If your income is constant and has been from the start of the year, you should be paying 40% already.

    If it is a bonus or other increase, then you will start paying 40% once your average salary hits the cutoff period of the week or month that you are in. To get a better idea of this, divide your yearly cutoff by 12 or 52 and then multiply by the current month/week. If your cummulative income for the year is above the cutoff, then you will start paying 40% on whatever is above the cutoff.

    This works in reverse as well. So if your bonus comes in July, this can push you into 40%, even if your total yearly income is below the threshold. However, if this is the case, you can get the tax back in subsequent months, or at the end of the year.

    If you have recently started the job, it will also depend on what unused tax credits you have from earlier in the year.


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