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17-09-2020, 14:25   #1
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Join Date: Jul 2012
Posts: 166
Income Tax - Clarification

Hi all,

I am requesting your kind help as I believe something isn't right with the taxes applied to my new job.

To give you a bit of background:

I recently changed jobs. My previous job paid €40K (yearly) whereas my current job is at €48K (yearly). I therefore would expect a slight increase on my monthly income.
Prior to accepting the role, I had used a few simulators to assess the tax & net income for the new job (forecast at circa. €35.5K or €2.9K monthly).

Today, I had the great displeasure of looking at my reported payment for September and something isn't sitting right. I'm actually earning less than I did in my previous job when the tax basis is Cumulative for both. As a matter of fact, my income tax doubled when I made the switch from Week 1 in August to Cumulative in September.

In any case, it doesn't make sense that I am earning less from a net income perspective when I'm making more gross-wise. Sure, income taxes are higher, but not to this extent.

To give you some numerical facts:
Previous job at €40K (cumulative tax basis) - Generic salary with no overtime or bonus
Gross Pay: €3,333
Pay for for income tax: €3,300
Income tax: €439
USC: €92.31
PSRI: €133.3
Net monthly income: €2,636 - Result of the above (& matches my monthly income)

Current job at €48K (cumulative tax basis) - Generic salary with no overtime or bonus
Gross Pay: 4,136
Pay for income tax: €4,096
Income tax: €1,347
USC: 6.73
PSRI: 165.46
Net monthly income: 2,576 - Result of the above

If we take into account:
Cut-off: €35,300

€35,300*20%= €7,060
€12,700*40%= €5,080

Tax credits: €3,300

= 12,140-3,300= 8,840 + USC
= Yearly net salary of circa. €36K - monthly around €2.9K.

Sure enough, an €8K salary increase does not trigger a €1K monthly income tax increase.

I don't owe anything to the revenue either as income tax is obviously paid through PAYE. I really do think something isn't right with this. I've changed jobs before and had a €12K increase last year when I moved to the €40K job and it didn't negatively impact my income.

Can anyone advise?

Thank you.

Last edited by GlobalSun; 17-09-2020 at 17:04.
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18-09-2020, 19:03   #2
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Join Date: Apr 2009
Posts: 54,871
Your overall net figures for the first job pretty much tally with my calculator's results. However, it isn't clear why the gross v pay for tax purposes should differ in your calculations. Were you receiving some sort of €33 expense allowance included in the €3333 monthly amount? Your 'old tax value' of €439 seems a bit lower than expected for an income of €3333 per month (I make it €470 per month for the old job). Both PRSI and USC for the old job seem spot on.

The new job (annual salary is greater than €48000 based on the figures you're using) seems way off- the tax seems high; the USC is very, very low; the PRSI is correct. My calculations for 'old v new' show the following (and I'm ignoring the discrepancy between gross and 'pay for tax' purposes):

Your best avenue is to approach the payroll section or whoever calculated the pay and ask for more information about how the values were computed.
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19-09-2020, 10:15   #3
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Join Date: Jul 2012
Posts: 166
Wow, thanks a lot for this! Appreciate you taking the time to look into this. It definitely clarifies the situation!
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