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If I earn €25k, do I pay the 2% income levy on €25k or (€25k - €15,028) ?

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  • 09-04-2009 2:42pm
    #1
    ceret
    Registered Users Posts: 189 ✭✭


    Title says it all really.

    I'd heard that the upper income levys (ie the 4% and 6%) are only charged on what you get over that threshold. So someone on €100k pays 2% on €75ishk and then 4% on €100k - €75ishk.

    What I'm wondering is if that kind of thinking applies to the 2% levy that I'll be paying. Assuming I'm on €25k, do I pay 2% of €25k or 2% of (€25k - €15,028) ?


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    #2
    johnnyskeleton
    Moderators, Entertainment Moderators, Politics Moderators Posts: 14,507 Mod ✭✭✭✭johnnyskeleton


    2% of the whole lot. If you are marginal e.g. earning close to the €76k, there is a large disincentive to get a small pay increase as it will mean paying more in taxes.

    It's the same with all levels; if you're total income is in the 4% bracket you pay 4% on all of it, if it's in the 6% bracket you pay 6% on all your income.

    It's quite a mess if you're self employed or work more than one job.


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    #3
    MikeC101
    Registered Users Posts: 1,707 ✭✭✭MikeC101


    Really??

    So if I was on 15,000 a year I'd take it all home, whereas if I'm on 15,200 I'd only take home 14,896 ?

    Wow..


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    #4
    Nody
    Moderators, Category Moderators, Arts Moderators, Business & Finance Moderators, Entertainment Moderators, Society & Culture Moderators Posts: 18,316 CMod ✭✭✭✭Nody


    Same system in a few other countries as well (France for one as I recall) so yes if you are due to go over make sure you go noticably over if at all possible.


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    #5
    ceret
    Registered Users Posts: 189 ✭✭ceret


    johnnyskeleton wrote: »
    2% of the whole lot. If you are marginal e.g. earning close to the €76k, there is a large disincentive to get a small pay increase as it will mean paying more in taxes.

    It's the same with all levels; if you're total income is in the 4% bracket you pay 4% on all of it, if it's in the 6% bracket you pay 6% on all your income.

    It's quite a mess if you're self employed or work more than one job.

    I remember reading somewhere that if you're on the 4% or 6% one that you wouldn't pay it on the whole lot....


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    #6
    DanR
    Closed Accounts Posts: 66 ✭✭DanR


    Try this attachment to work it out...;)


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    #7
    johnnyskeleton
    Moderators, Entertainment Moderators, Politics Moderators Posts: 14,507 Mod ✭✭✭✭johnnyskeleton


    ceret wrote: »
    I remember reading somewhere that if you're on the 4% or 6% one that you wouldn't pay it on the whole lot....

    Maybe it doesn't apply at the higher levels. I thought that it did, but I was only concerned with the lower level / minimum wage exemption.


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    #8
    Zillah
    Registered Users Posts: 17,371 ✭✭✭✭Zillah


    johnnyskeleton wrote: »
    2% of the whole lot. If you are marginal e.g. earning close to the €76k, there is a large disincentive to get a small pay increase as it will mean paying more in taxes.

    It's the same with all levels; if you're total income is in the 4% bracket you pay 4% on all of it, if it's in the 6% bracket you pay 6% on all your income.

    It's quite a mess if you're self employed or work more than one job.


    Where did you learn this? Because that would be absolutely insane if it were the case. People with a higher gross salary would have a smaller net income than others with a smaller gross income.


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    #9
    johnnyskeleton
    Moderators, Entertainment Moderators, Politics Moderators Posts: 14,507 Mod ✭✭✭✭johnnyskeleton


    Zillah wrote: »
    Where did you learn this? Because that would be absolutely insane if it were the case. People with a higher gross salary would have a smaller net income than others with a smaller gross income.

    That's the position at the lower end i.e. if you earn minimum wage you don't pay the levy, if you earn €1 above it then you pay 2% on the lot. I'm not certain that the same applies at the threshold of the higher levels, but I understood that it did.


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    #10
    Hobbes
    Registered Users Posts: 21,264 ✭✭✭✭Hobbes


    Zillah wrote: »
    Where did you learn this?

    If it is like the 1% levy then it is on the lot of it.


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    #11
    ninty9er
    Registered Users Posts: 9,366 ✭✭✭ninty9er


    It's on the whole lot.

    Ie if you earn €76K you pay a levy of €3040
    If you earn €74k you pay a levy of €1480


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    #12
    MadsL
    Registered Users Posts: 20,299 ✭✭✭✭MadsL


    Interesting situation now, your employer can give you a pay raise by cutting what he pays you! Only in Ireland.....:rolleyes:


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    #13
    dresden8
    Registered Users Posts: 3,290 ✭✭✭dresden8


    That situation always existed in PRSI, you pay nothing up to 352, or 356 can't remember off the top of my head which, but once you go over the threshold it's (357-127) by the PRSI rate.

    Nothing new here, it's how we do things.


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    #14
    oldyouth
    Closed Accounts Posts: 4,754 ✭✭✭oldyouth


    MadsL wrote: »
    Interesting situation now, your employer can give you a pay raise by cutting what he pays you! Only in Ireland.....:rolleyes:
    On a related issue, my employer cut salaries by 2.5% for those up to €30k and 7.5% for those over €30k, so if you were just below the threshold, you were far better off than those just above it


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    #15
    Ludo
    Registered Users Posts: 5,015 ✭✭✭Ludo


    MadsL wrote: »
    Interesting situation now, your employer can give you a pay raise by cutting what he pays you! Only in Ireland.....:rolleyes:

    Nothing new about this...there has always been situations like that.

    Not really just in Ireland either. I imagine loads of countries have limits like this on incomes resulting in this kind of situation.


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    #16
    ceret
    Registered Users Posts: 189 ✭✭ceret


    Ludo wrote: »
    Nothing new about this...there has always been situations like that.

    Not really just in Ireland either. I imagine loads of countries have limits like this on incomes resulting in this kind of situation.

    I'm sure other countries have tax cut offs, but normally they just tax you on what's over the cut off. Meaning a cut in your pay shouldn't result in a pay rise


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    #17
    dresden8
    Registered Users Posts: 3,290 ✭✭✭dresden8


    ceret wrote: »
    Meaning a cut in your pay shouldn't result in a pay rise

    You're going to hear a lot more from here on in about poverty traps. For example an increase in pay around a threshold will result in a take home pay that is less.

    Lone Parent's losing rent allowance and their books etc.

    They were always there though.


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    #18
    ceret
    Registered Users Posts: 189 ✭✭ceret


    Normal PAYE income tax doesn't work like this though, right? If you earn €40k, then you're taxed 20% up to €35,000ish and then 41% after that...


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    #19
    copacetic
    Subscribers Posts: 16,587 ✭✭✭✭copacetic


    ninty9er wrote: »
    It's on the whole lot.

    Ie if you earn €76K you pay a levy of €3040
    If you earn €74k you pay a levy of €1480

    No, you don't.

    Jeez guys the misinformation on this thread is stunning.

    If you hit the lower threshold you pay the 2% on the whole of your gross.

    However the upper levels are incremental. As the levy has always been. One minute to check the revenue site would be worthwhile.

    http://www.revenue.ie/en/practitioner/law/income-levy.pdf
    1.8 Is the higher % being charged on all earnings or just on the earnings over the relevant threshold?

    The 2% levy is charged on income earned between €100,101 p.a. and €250,120 p.a. and the 3% is being charged on income earned in excess of €250,120 p.a.

    E&Y calculator here shows that at 74k income levy is €1,480.00 at 76k it is €1,539.28.

    http://www.ey.com/global/content.nsf/Ireland/Budget_2009_-_Tax_calculator


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