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Ex 10.2
– Second level
• Third level

Income Tax and Deductions

– Fourth level
» Fifth level

Learning Intention
By the end of this lesson you should know how to
• Work out tax payable including the Higher rate
• How to work out USC
• How to work out PRSI

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– Second level
• Third level
– Fourth level
» Fifth level

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Ex 10.2 Income Tax and Deductions
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E.g. to edit Master
1 The standard text styles
rate of income tax is 20% and the
higher rate is 41%. The standard rate cut-off point is
– Second level
€32,800. keilidh mua has a gross income of €47,500 and
• Third level
total tax credits of €2,450. Calculate keilidhmua’s net
– Fourth level
income (ignore PRSI and USC).
» Fifth level

Standard Rate (20%) Higher Rate (41%)

32,800 14,700
(i) SR tax = 32,800 x 20% Net tax = gross tax – tax credits
= €6,560 Net tax = €12,587 − €2,450
HR tax = 14,700 x 41% = €10,137
= €6,027
Net income = Gross pay – total deductions
Gross tax = €6,560 + €6,027
= €47,500 − €10,137
= €12,587
= €37,363

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Ex 10.2 Income Tax and Deductions
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– Second level
• Third level
– Fourth level
» Fifth level

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Ex 10.2 Income Tax and Deductions
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E.g. to edit
2 Sanabel earns Master
€83,750text
perstyles
annum. Calculate the
amount that willlevel
– Second be deducted from her annual pay for the
universal social charge.
• Third level
Rate Charged
– Fourth level
Amount
» Fifth level
of on Amount payable Amount
in Band
USC Income
First
0.5% €12,012 €12,012x 0.5% €60.06
€12,012
€12,012
2% to €7,862 €7,862 x 2% €157.24
€19,874
€19,874
4.5% to €50,170 €50,170 x 4.5% €2,257.65
€70, 044
Above
8% €13 706 €13 706 x 8% €1096.48
€70, 044
Total €3571.43
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PRSI
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– Second level
• Third level
– Fourth level
» Fifth level

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PRSI
• 3Click
E.G Conortoearns
edit€650
Master per text
week,styles
he is in Class A1
for PRSI, which has
– Second levelthe following rates
Calculate:• Third level
(i) His PRSI payment this week
– Fourth level
(ii) His employer's» PRSI payment this week
Fifth level
(iii) The total amount of PRSI that will be paid this
week
(i) His PRSI = €298 x 4%
= €11.92
PRSI First €352 Balance
(ii) Employers PRSI = €650 x 10.75% Employee % 0 4
= €69.88 Employer % 10.75 10.75

(iii) Total PRSI = €11.92 +69.88

= €81.80

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Ex 10.2 Income Tax and Deductions
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E.g.4 to aedit
Zac has Master
gross annualtext styles
income of €50,000. His standard
rate cut-off point is €32,800. The standard rate of tax is 20%.
– Second level
The higher rate is 41%. His annual tax credit is €3,500. Zac is in
• Third level
Class Al for PRSI, which has the weekly rates shown. He pays no
– Fourth level
other deductions. Assuming a 52-week year, calculate Zac's
» Fifth level
annual:
(i) Gross tax (ii) Tax payable (iii) Net income (ignoring PRSI)
Standard Rate (20%) Higher Rate (41%)
32,800 17,200
(i) SR tax = 32,800 x 20%
Net tax = gross tax – tax credits
= €6,560
(ii) Net tax = €13,612 − €3,500
HR tax = 17,200 x 41% = €10,112
= €7,052
(iii) Net income = Gross pay – total deductions
Gross tax = €6,560 + €7052
= €50,000 − €10,112
= €13,612 Net income = €39,888

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Ex 10.2 Income Tax and Deductions
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E.g.4 to aedit
Zac has Master
gross annualtext styles
income of €50,000. His standard
rate cut-off point is €32,800. The standard rate of tax is 20%.
– Second level
The higher rate is 41%. His annual tax credit is €3,500. Zac is in
• Third level
Class Al for PRSI, which has the weekly rates shown. He pays no
– Fourth level
other deductions. Assuming a 52-week year, calculate Zac's
» Fifth level
annual: Net income = €39,888
(iv) PRSI payment (v) Net income after PRSI has been paid
(iv) His PRSI = €609.54 x 4%
= €24.38
⇒ €24.38 x 52 = €1267.76
(v) Net income after PRSI
has been paid = Net income - PRSI
= €39,888 − €1,267.76
= €38620.24 PRSI First €352 Balance
Employee % 0 4
Employer % 10.75 10.75
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 JCHL 2015 Q3
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Eleanor toa edit
has grossMaster text styles
income of€38 500 for the year.
She has an annual tax credit of€3300.
– Second
The standard level
rate cut-off point is €33 800.
• Third level
Fourth level
The standard –rate of income tax is 20% and the higher rate is 40%.
» Fifth level
(a) Find Eleanor's net income for the year (i.e. after tax is paid).
Standard Rate (20%) Higher Rate (40%)
33,800 4,700
(i) SR tax = 33,800 x 20%
Net tax = gross tax – tax credits
= €6,760
(ii) Net tax = €8,640 − €3,300
HR tax = 4,700 x 40% = €5,340
= €1,880
(iii) Net income = Gross pay – total deductions
Gross tax = €6,760 + €1880 = €38, 500 − €5,340
= €8,640
Net income = €33160
Eleanor receives a pay rise. As a result, her net income for the year is €34 780.
(b) Find Eleanor's new gross income for the year.
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JCHL 2015 Q3
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Eleanor toa edit
has grossMaster
income oftext
€38styles
500 for the year.
She has an annual tax credit of€3300.
– Second
The standard level
rate cut-off point is €33 800.
• Third level
Fourth level
The standard –rate of income tax is 20% and the higher rate is 40%.
» Fifth level
(a) Find Eleanor's net income for the year (i.e. after tax is paid).
Net income = €33160
Eleanor receives a pay rise. As a result, her net income for the year is €34 780.
(b) Find Eleanor's new gross income for the year.
𝐼𝑛𝑐𝑟𝑒𝑎𝑠𝑒 = €34 780 − 33 160 𝐼𝑛𝑐𝑟𝑒𝑎𝑠𝑒 = €38 500 + 2 700
60% = €1620
𝐼𝑛𝑐𝑟𝑒𝑎𝑠𝑒 = €41 200
1% = 27

100% = €2700

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Ex 10.2 Income Tax and Deductions
• Click to edit Master text styles
– Second level
• Third level
– Fourth level
» Fifth level

Developed by N. Doherty
• Click to edit Master text styles
– Second level
• Third level
– Fourth level
» Fifth level

Developed by N. Doherty