Budget Rumours 2015 – What they mean for you (Part 1)

We’re just two weeks away from Budget 2015 and speculation and expectation are on everyone’s lips… Will there be tax cuts and who will get them?  There is a lot of jargon being bandied about at the moment, so we thought we’d break it down for you to simplify the rumours that are out there and give some examples so you can see how this might affect you.

In the first part of our budget rumours series, we are taking a look at one of the most popular speculations at the moment – reducing the USC rates.

1. Reduce USC by 1%

Everyone who works and earns an income over €10,036 a year must pay USC, which is in addition to PAYE and PRSI taxes. USC is charged at a rate of 2% for the first €10,036, 4% for the next €5,980, and 7% on the remainder of your income.

At the moment, USC looks like this:

The prospect of reducing USC for Budget 2015 has gained popularity over the past few weeks as it means everyone who is liable for USC will benefit from some extra disposable income in their pay packets pockets. There are 3 possible options when it comes to reducing USC by 1%.

If the Government decrease the lower rate of USC from 2% to 1% to ease the tax burden on lower income earners, USC would look like this:

According to the Irish Tax Institute, the cheapest option for the Exchequer is to reduce the middle USC rate from 4% to 3%. If the Government were to do this, USC would look like this:

The third option is to decrease the upper USC rate from 7% to 6%. This would only benefit those earning above €16,016. USC would then look like this:

From these examples, we can see someone earning €26,000 would benefit equally from a reduction in both the lower and upper USC rates, and reducing the middle USC rate would give the least benefit to all workers. The clear winner for those earning €18,000 is a reduction in lower rate USC, while those on €34,000 and €42,000 will be hoping for a decrease in the upper rate USC.

I hope these examples have given you an idea of how changes to USC would impact your own take-home pay. In our next post, we’ll look at what would happen if the Government reduce the Income Tax rates in the upcoming Budget, so check-back soon.

To have our experts check your taxes for a refund before Budget Day, apply now.

Written by Alexandra Byrne.

I’m what you call an all-rounder! Having worked in customer services, accounting and now in marketing, I’m the one who can tie all the pieces of the puzzle together. I’ve a BSc from University of Limerick so I’m analytical, but I also love change! I’m constantly astounded by the lack of awareness we Irish have about our entitlements, and I like spreading the word about tax refunds – so as many people as possible can claim everything they are entitled to.