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Leo Varadkar’s tax cut plan – what it will mean for your pocket

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An Taoiseach Leo Varadkar recently committed to raising the level at which people start to pay the top rate of tax (40%) on their income from €35,300 to €50,000 for a single person (or €100,000 for a two income couple).

The proposal involves the higher rate threshold raising by €2,500 each year over the next five years.

The average full-time income in Ireland is roughly €46,000 per year. And according to an Taoiseach, "around 920,000 taxpayers" would benefit from such a move.

It is estimated that the plan will cost the government approximately €600m per year.

But what will it mean for your pocket?

We've crunched the numbers!

The average Irish tax refund is €1076.17

GET YOURS NOW

Will Leo's tax plan boost YOUR wallet? Find out by filling out the short calculator below.

There are also some case studies listed beneath the calculator.

 

 

 

Let's take a look at some examples.

Case 1

Peter – income €40,000 per year

30 year old Peter works in marketing where he earns €40,000 per annum.

He's not married and does not have any children.

His current monthly take home pay is €2,618.58.

When the government's plan is introduced, and the higher tax rate threshold is increased to €50,000, his monthly pay packet will increase to €2,714.75.

In other words, he'll have just under €100 in his back pocket to spend each month.

Case 2

Phillip and Pamela – combined income of €70,000 per year

Philip (29) and Pamela (31) are married and have no kids.

Philip works in IT and earns €34,000 per year. Pamela works in the hospitality industry and earns €36,000 per year.

This year, their monthly take home pay has been €4.810.07.

The government's tax plan would bring their take home pay to €4,833.67 – an increase of roughly €23 per month.

Case 3

Paul and Polly – combined income of €90,000 per year

Married couple Paul (45) and Polly (46) are jointly assessed for tax purposes. They both work in the banking sector and earn €45,000 per annum. They have two kids under the age of 10.

At present, their combined take home pay is €5,944.24.

Under the new plan, their take home pay would be €6,305.34. So, in total, Paul and Polly would benefit by more than €360 per month.

Case 4

Pat and Penelope – combined income of €110,000 per year

Pat (48) runs his own business and earns 110,000 per year. His wife Penelope (44) works in their home and minds their three children, who are all under the age of 10.

Under the current tax system, their take home pay each month is €6,265.78.

When the new tax measures are introduced, their monthly take home pay increases to €6,576.55, which equates to an increase of €311.

Note:
The above calculations use the same tax credits, USC and PRSI rates and amount of child benefit as outlined in Budget 2019. The calculation is based on an increase in the income tax threshold from 35,300 (2019) to €50,000 (which is a difference of €14,700). It is also based on an assumption that any other threshold (single parent, married one earner and married two earners etc.) will benefit from the same increase. Lastly, the monthly take home comparison is made against 2018 rates.

Money in your pocket

Of course, an Taoiseach's plan will take years to fully come to fruition.

So how can you get some cash back in your pocket right now?

Easy! Most Irish taxpayers are entitled to claim some tax back right now!

Taxback.com can help you avail of your entitlements and maximise what you're due.

Get a FREE, no-obligation estimate of what you're

You can also get a no obligation estimate of your tax refund right here.

The average PAYE tax refund is €995.

The average Irish tax refund is €1076.17

GET YOURS NOW

An Taoiseach Leo Varadkar recently committed to raising the level at which people start to pay the top rate of tax (40%) on their income from €35,300 to €50,000 for a single person (or €100,000 for a two income couple).

 

The proposal involves the higher rate threshold raising by €2,500 each year over the next five years.

 

The average full-time income in Ireland is roughly €46,000 per year. And according to an Taoiseach, “around 920,000 taxpayers” would benefit from such a move.

 

It is estimated that the plan will cost the government approximately €600m per year.

 

But what will it mean for your pocket?

 

We’ve crunched the numbers!

About The Author

Mark Corcoran - Digital Content Executive @ Taxback.com

Mark is the Digital Content Executive at Taxback.com. Since graduating from Griffith College Dublin with a degree in Journalism and Visual Media, his work has been published both in print and online.

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