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Each year the national budget is decided by the minister for finance. The Amount of money (tax bands) you can earn at the the various tax rates is decided as shown below. | Personal Circumstances | 2006
€ | 2007
€ | Single/Widowed
without dependant children | 32,000 @ 20%
Balance @ 42% | 34,000 @ 20%
Balance @ 41% | | Single widowed qualifying for One Parent Family tax Credit | 36,000 @ 20%
Balance @ 42% | 38,000 @ 20%
Balance @ 41% | | Married Couple one spouse with Income | 41,000 @ 20%
Balance @ 42% | 43,000 @ 20%
Balance @ 41% | | Married Couple both spouses with Income | 41,000 @ 20% with increase of 23,000 max.
Balance @ 42% | 43,000 @ 20% with increase of 25,000 max.
Balance @ 41% | There are also tax credits issued to you i.e. a certain amount of tax you do not have to pay over each week. So when the tax is calculated on all the money you earn, you are then given a credit for some of the tax and you get to keep that amount. An example is shown later in the article.
Here are the tax credit for the years 2006 and 2007
| Tax Credits | 2006€ | 2007€ | | Single Person | 1,630 | 1,760 | | Married Person | 3,260 | 3,520 | Widowed person
(without dependent children) | 2,130 | 2,310 | | One Parent Family Credit | 1,630 | 1,760 | | PAYE Credit | 1,490 | 1,760 | The tax credit system makes it easier to calculate exactly how much tax you have to pay each week. Example 1: Single person paying tax under PAYE system
Wage is E36,400 per year, E700 Gross per week | Tax Bands (Cut off point) | Tax Credits | | Yearly | Weekly | Yearly | Weekly | | 34,000 | 653.85 | 3520
(Single person credit
+ PAYE credit 1,760) | 67.70 | Note: If you are a business owner/shareholder/proprietory director you are not entitled to a PAYE tax credit. Your income tax is calculated as follows Yearly tax calculation | 34,000 @ 20% | 6,800 | | | balance 2,400 @ 41% | 984 | | | Total tax | 7,784 | | | Tax credit | 3,520 | (amount of tax you do not have to pay) | | Total tax to pay | 4,264 | | Weekly tax calculation (Weekly cut off point is E653.95) | 653.85 @ 20% | 130.77 | (130.77 x 52 weeks = 6,800) | | balance 46.15 @ 41% | 18.92 | (18.92 x 52 weeks = 984) | | Total tax | 149.69 | (149.69 x 52 weeks = 7,784) | | Weekly tax credit | 67.70 | (67.70 x 52 weeks = 3,520) | | Total tax to pay | 81.99 | (81.99 x 52 weeks = 4,264) | Your cut off point, your tax credits and the breakdown of your tax credits are sent to you at least once a year. This is an important document and should be checked each time to see if all your tax credits are listed. If you are married make sure you are given the married tax credit. Also make sure you are not given tax credits you are not due. If you are given tax credits you should not have, the taxman will come looking for the tax you should have paid. So if you are single and a married tax credit is given to you, then ring your tax office and get it changed to the correct tax credit. There are many tax credits you can claim. You can get more details here http://www.revenue.ie/budget/budget2007/income_07.htm#4 PRSI is separate from income tax. How PRSI is calculated is dealt with in another article. article:100016 (c) Nilsson Denver Ltd 2007 |
