1. Income Tax – Learning Outcomespg
Income Tax – Learning Outcomes
Solve problems about income tax, including PAYE, PRSI, USC, other deductions, and tax credits.

2. Solve Problems About Income Taxpg
Solve Problems About Income Tax
Gross pay is the money you are paid before deductions.
Deductions are subtracted from your gross pay:
PAYE – pay as you earn, the main income tax.
PRSI – pay related social insurance, contributes to welfare.
USC – universal social charge.
Also includes union fees, pension contributions, etc.
Tax credits allow you to avoid paying a certain amount of tax.
Net pay is the money you are paid once deductions are taken into account.

3. Solve Problems About PAYEpg
Solve Problems About PAYE
PAYE is charged at two rates:
You pay 20% tax on your income up to the standard rate cut off (varies per person, about € – € ).
You pay 40% tax on any income past the standard rate cut off.

4. Solve Problems About PAYEpg
Solve Problems About PAYE
e.g. Laura’s gross pay is € per year. Her standard rate cut- off is €
How much of her income is taxed at 20%?
How much of her income is taxed at 40%?
What is her total PAYE?

5. Solve Problems About PRSIpg
Solve Problems About PRSI
PRSI is calculated based on type of work (e.g. office work, service sector, farmers etc.) and the amount earned per week.
There are a lot of categories, but most people are in Class A, e.g.
A0 – between €38 and €352 per week are exempt.
AX – between €352 and €356 per week do not pay PRSI on the first €127, but pay 4% on the balance.
AL – earnings between €356 and €500 are pay 4%.
A1 – €500 and over pay 4%.
A2 – €500 and over pay 4%.

6. Solve Problems About PRSIpg
Solve Problems About PRSI
Employers also pay PRSI for each of their employees.
e.g. Chloe earns €650 per week. She is in class A1, so she pays 0% on the first €127 she earns per week and 4% on the balance.
Chloe’s employer also pays 10.75% on all her earnings.
How much PRSI does Chloe pay?
How much PRSI does Chloe’s employer pay?

7. Solve Problems About USCpg
Solve Problems About USC
USC works similarly to PAYE and PRI, but everyone has the same cut-offs:
1% of the first €12 012,
3% of the next €6 656,
5.5% of the next €51 376,
8% of the remaining income.

8. Solve Problems About USCpg
Solve Problems About USC
e.g. Julven earns € per annum (i.e. per year).
Calculate the USC she pays each year.

9. Solve Problems About Tax Creditspg
Solve Problems About Tax Credits
Each person is allowed to not pay a certain amount of tax based on their circumstances:

10. Solve Problems About Income Taxpg
Solve Problems About Income Tax
Cathy works in a bakery and earns €8.65 per hour. She works 40 hours a week. Find Cathy’s gross pay for the week.
Cathy has to pay income tax at a rate of 20%. Find Cathy’s gross tax.
She has a tax credit of €20 per week. Find Cathy’s net tax.
Cathy pays €10 into her pension each week. How much per week is she left with?

11. Solve Problems About Income Taxpg
Solve Problems About Income Tax
Last year Elena had a gross income of € She had to pay Universal Social Charge (USC) and income tax on her gross income. The rates and bands of USC are as follows:
Find the amount of USC that was deducted from Elena’s gross income last year.
The standard rate of income tax was 20% and the higher rate was 41%. The standard rate cut-off point was € Elena paid a total of € income tax last year. Find Elena’s tax credits for the year.

12. Solve Problems About Income Taxpg
Solve Problems About Income Tax
Eleanor has a gross income of €38500 for the year. She has an annual tax credit of €3300. The standard rate cut- off point is € The standard rate of income tax is 20% and the higher rate is 40%. Eleanor pays union fees of €250 per year.
Find Eleanor’s net pay for the year.
Eleanor receives a pay rise. As a result, her net income for the year is € Find Eleanor’s new gross income for the year.