Specialist
With Budget 2022 now complete Paycheck Plus’ payroll experts have analysed the key takeaways and how will they affect your employees’ net pay.
From a payroll perspective the headline measures include increases to: the minimum wage, income tax rate bands and the personal tax credits.
Minimum Wage has increased by €0.30 per hour for Experienced Adult Workers with younger employees also receiving increases. Workers aged 19 will receive 90% of the nominal minimum wage which is €9.45 per hour, while those aged 18 will receive €8.40 per hour and those under 18 will receive €7.35 per hour.
Standard Rate Cut Off Points have increased by €1,500 as per the table below
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Personal Tax Credit, the Earned Income Credit and the PAYE Tax Credit have all increased by €50 with all three tax credits now at €1,700.
The weekly threshold for higher rate of employer PRSI will increase by €12 from €398 to €410 per week, from the 1st of January 2022. This has been done to ensure that there is no incentive to reduce the working hours for a full-time employee on the increased minimum wage. The ceiling of the second USC rate band has also increased from €20,687 to €21,295per annum.
What does this mean for your employees’ net pay?
To illustrate how these changes will impact your employees’ take home pay we’ve included 3 simple calculations which demonstrate the impact that Budget 2022 will have on a minimum wage worker, a single person earning €38,000 and a married couple earning a combined €75,000 (split €40,000, €35,000)
Minimum Wage Employees
In the case of the minimum wage employees working a 37.5 hour week, we can see that they would earn €435.40 more per annum as a result of the changes implemented in the budget.
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Single Worker
Most single workers will also benefit, as demonstrated in this second calculation, which shows that a person earning €38,000 per annum is likely to have more than €415 extra disposable income per year, or approx. €8 per week, when compared with last year.
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Married Couple
Married couples are also significantly better off making. In this case the couple makes out with more than €830 extra disposable income per annum.
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*Due to the complexity of tax and PRSI regulations, results are based on a number of tax assumptions
For more information on Budget 2022 or to claim your 2022 Tax Fact Card visit paycheckplus.ie
By Morgan Campbell - Paycheck Plus