2021 Payslip Changes
Below we detail some of the 2021 Payslip Changes that may occur for you based on the recent Budget 2021 and how they will affect your payslip in 2021. The Budget was announced on the 13th of October 2020 and there are also some changes that tax payers may not be aware of outside of their payslip as well.
Income Tax
There are no changes to the income tax rate bands. The tax rate band for a Single Individual remains the same – €35,300, for Married couples with only one income – €44,300 and up to €70,600 for Married couples with 2 incomes. This effectively means that you will be chargeable to the standard rate of tax 20% up to this amount.
Universal Social Charge
There are some very small changes to the USC. Below are the USC chargeable rates for the year 2021:
- €0 – €12,012 @ 0.5%
- €12,012.01 – €20,687.00 @ 2%
- €20,687.01 – €70,044 @ 4.5%
- €70,044.01 + @ 8%
The current reduced rate of USC for eligible medical card holders is extended to 2021. Full medical card holders and individuals over the age of 70 whose total income does not exceed €60,000, will be required to pay a maximum USC rate of 2%.
No changes to USC Exempt Categories – if an individual’s income for the year does not exceed €13,000, they are exempt from paying USC.
Dependent Relative Tax Credit
Dependent Relative Tax Credit will increase from €70 to €245 in 2021.
Home Carers Tax Credit
There are no changes to Home Carers Tax Credit in 2021. It will remain the same – €1,600. The credit is awarded when a married couple are jointly assessed and one spouse is in the home caring for one or more dependents and whose income is below €7,200.
The Earned Income Tax Credit
The Earned Income Tax Credit will increase from €1,500 to €1,650 in 2021. This is only relevant to tax payers with self-employed or professional income and for business owners/managers who are ineligible for the PAYE tax credit.
Help-to-Buy Scheme
Help-to-Buy scheme has been extended to the end of 2021. The scheme remains subject to the same conditions.
We would always recommend getting your taxes checked each year to ensure that you paid the correct amount of tax in the previous year and to claim any refunds that you may be entitled to.
Hope we have shed some light on the changes that you should expect for 2021 and Happy Christmas!
Best Wishes,
Dalia Simanskyte
Tax Manager
