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Understanding Tax, USC & PRSI

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  • 25-11-2020 8:49pm
    #1
    beya2009
    Registered Users Posts: 675 ✭✭✭


    Hello,


    So I got a new job about 6 weeks ago that is paid monthly. I registered new job and submitted employer number about a month ago on revenue website. Before this job I worked for an outsourcing telecommunications company for 2.5 years but took this one as much better pay.


    Got my first payslip in the post and deductions came to €523.15 which seems extremely high to me from a gross pay of €2,977.69.
    Tax: €327.74
    USC: €76.31
    PRSI: €119.10


    Even last payslip from my previous employer with holiday pay...tax taken on that seemed high which was €277.30 from gross pay of €1,010.


    Does this make sense to anyone or is this normal tax deductions?


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    #2
    Nijmegen
    Registered Users Posts: 3,086 ✭✭✭Nijmegen


    beya2009 wrote: »
    Hello,


    So I got a new job about 6 weeks ago that is paid monthly. I registered new job and submitted employer number about a month ago on revenue website. Before this job I worked for an outsourcing telecommunications company for 2.5 years but took this one as much better pay.


    Got my first payslip in the post and deductions came to €523.15 which seems extremely high to me from a gross pay of €2,977.69.
    Tax: €327.74
    USC: €76.31
    PRSI: €119.10


    Even last payslip from my previous employer with holiday pay...tax taken on that seemed high which was €277.30 from gross pay of €1,010.


    Does this make sense to anyone or is this normal tax deductions?

    Run it through a tax calculator like the one from Deloitte and you’ll see how they arrived at the figure.

    Was your old job paid biweekly? So your annual salary would have been about €24,240 and your new role is €35,732? Could be variable if you’re paid hourly (which can lead to some variation in take home as its estimated annually, and you should get it back).

    Anyway, at €24,240 you’d pay €2,911 in tax per year or so, or €121.29 biweekly or €242.58 monthly (and if your hours were variable, perhaps your final paycheque was balancing something out.)

    At that salary you’d be paying €4,840 at the lower 20% rate and your tax credit of €3,300 would eat up most of it; and you’d pay €970 in PRSI and €393 in USC. Your income tax in particular will scale rather quickly now because you’re out of your tax credit.

    At €35,732 you’re now just into the 40% rate, paying €172.91 at that rate and any pay rises you get from here on out you’re gonna be receiving fewer and fewer cents in every additional euro. You’re paying the full whack of €7,060 at 20% (again before your credit of €3,300), €1,429 in PRSI and €911 in USC.

    Our tax system is designed so you pay very little at lower incomes, much less than in many European countries, but then the moment your gross salary starts to scale into the €30-40k range and beyond the tax just scales massively.


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    #3
    namenotavailablE
    Registered Users Posts: 59,553 ✭✭✭✭namenotavailablE


    beya2009 wrote: »
    Got my first payslip in the post and deductions came to €523.15 which seems extremely high to me from a gross pay of €2,977.69.
    Tax: €327.74
    USC: €76.31
    PRSI: €119.10


    Those deductions figures tally pretty much to the cent with my spreadsheet on that monthly income assuming that you have typical single person tax credits and cut-off point.

    As per above post, you can check against a number of different calculators. Here is a list:

    My macro enabled Excel spreadsheet (Windows only and needs Excel 2010 or newer to work): http://taxcalc.eu/monthlyss/Employee...alculator.xlsm

    Other calculators
    Karl Grabe's web app: http://taxcalc.eu
    Hookhead's calculator: http://www.virtualaccountant.ie/Tools/tax2020.jsp
    Deloittes: http://services.deloitte.ie/tc/
    Taxcalc.ie: https://taxcalc.ie/budget-2020/

    Free Excel net pay calculator- https://taxcalc.eu/monthlyss/Employee%20PAYE%20calculator.xlsm



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    #4
    mystic86
    Registered Users Posts: 2,983 ✭✭✭mystic86


    beya2009 wrote: »
    Hello,


    So I got a new job about 6 weeks ago that is paid monthly. I registered new job and submitted employer number about a month ago on revenue website. Before this job I worked for an outsourcing telecommunications company for 2.5 years but took this one as much better pay.


    Got my first payslip in the post and deductions came to €523.15 which seems extremely high to me from a gross pay of €2,977.69.
    Tax: €327.74
    USC: €76.31
    PRSI: €119.10


    Even last payslip from my previous employer with holiday pay...tax taken on that seemed high which was €277.30 from gross pay of €1,010.


    Does this make sense to anyone or is this normal tax deductions?

    17.6%, how is that extremely high?


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    #5
    beya2009
    Registered Users Posts: 675 ✭✭✭beya2009


    Nijmegen wrote: »
    Run it through a tax calculator like the one from Deloitte and you’ll see how they arrived at the figure.

    Was your old job paid biweekly? So your annual salary would have been about €24,240 and your new role is €35,732? Could be variable if you’re paid hourly (which can lead to some variation in take home as its estimated annually, and you should get it back).

    Anyway, at €24,240 you’d pay €2,911 in tax per year or so, or €121.29 biweekly or €242.58 monthly (and if your hours were variable, perhaps your final paycheque was balancing something out.)

    At that salary you’d be paying €4,840 at the lower 20% rate and your tax credit of €3,300 would eat up most of it; and you’d pay €970 in PRSI and €393 in USC. Your income tax in particular will scale rather quickly now because you’re out of your tax credit.

    At €35,732 you’re now just into the 40% rate, paying €172.91 at that rate and any pay rises you get from here on out you’re gonna be receiving fewer and fewer cents in every additional euro. You’re paying the full whack of €7,060 at 20% (again before your credit of €3,300), €1,429 in PRSI and €911 in USC.

    Our tax system is designed so you pay very little at lower incomes, much less than in many European countries, but then the moment your gross salary starts to scale into the €30-40k range and beyond the tax just scales massively.


    Yes very similar to the figures you stated. I got a shock to the system when I first saw my payslip but it all makes sense now and thank you for providing that excellent clarification.


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    #6
    beya2009
    Registered Users Posts: 675 ✭✭✭beya2009


    mystic86 wrote: »
    17.6%, how is that extremely high?


    Seemed extremely high to me as I got a significant pay increase with the new job so not used to such deductions but it all makes sense now.


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    #7
    SouthWesterly
    Registered Users Posts: 6,456 ✭✭✭SouthWesterly


    Check your on cumulative tax and not week1. Any unused credits will then be applied.


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