Budget 2019 Payroll Considerations
With Budget 2019 announced, EisnerAmper Ireland examines its effect on take home pay and employer costs from 1 January 2019.
Income Tax
The most eye-catching of the measures introduced in Budget 2019, from an employee’s perspective, is the €750 increase in the 20% income tax rate ceiling (€1,500 for dual income households). This represents a potential increase in take home pay of €150 (€300 for dual income households). Other changes to income tax include a €300 increase in the home carer tax credit, and a €200 increase in the earned income tax credit – which will benefit proprietary directors.
Universal Social Charge (USC)
Other changes which will impact positively on most employees are in relation to USC. The 2% rate ceiling has been increased (see below), and rate band 3 (currently 4.75%) will be reduced to 4.5%. Overall the changes in USC rates could be worth up to €139 per year for those with higher incomes.
National Minimum Wage
An increase in the national minimum wage, from €9.55 per hour to €9.80 per hour, in and of itself should not affect the income of higher earners, however, to prevent full-time minimum wage earners from moving into a higher USC rate band the Minister for Finance and Public Expenditure & Reform, Paschal Donohoe TD, announced an increase in the 2% rate ceiling. This will benefit all employees with an annual income of over €19,372.
For employers, the national minimum wage increase has necessitated an increase in the employer PRSI higher rate threshold, which is a positive measure, although, an 0.1% increase in employer PRSI at both the lower and higher rates will have a negative impact on employer costs. It was also announced that there will be a further 0.1% increase in employer PRSI from 1 January 2020, which will see the higher rate at 11.05%.
For more information on Budget 2019 read our Budget 2019 Tax Considerations here.
Learn more about our outsourced payroll services here.
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