This site uses cookies to improve your experience and to provide services and advertising. By continuing to browse, you agree to the use of cookies described in our Cookies Policy. You may change your settings at any time but this may impact on the functionality of the site. To learn more see our Cookies Policy.
OK
Dublin: 14 °C Friday 19 July, 2019
Advertisement

What Budget 2018 means for you if you earn around €40,000 a year

There’ll be more money in your pocket next year after new tax reductions were outlined by the government.

MOST OF WHAT was contained in today’s budget was already well-flagged, but now that Minister Paschal Donohoe’s speech is done and dusted, we can take a look at what it all means for you.

If you’ve been earning in or around €40,000 here’s how things will stack up for you over the coming year.

Income tax

So, the good news.

There’s been a rise in the threshold after which you pay a higher rate of tax.

It used to be that, for a single person, if you earned over €33,800, you’d be charged 40% on anything over that. That threshold has now risen €750 to €34,550.

Beforehand, someone on €40,000 a year would pay around €9,240 of tax gross a year. Under the new threshold, it would save you around €150 a year on gross tax.

When you factor in the changes to the Universal Social Charge (USC), there are more savings there.

USC

The rates of the USC have also changed.

The 2.5% rate of USC up to earnings of €18,772 has changed. This is now 2% on earnings up to €19,372.

Similarly, the 5% USC rate above that has lowered to 4.75%.

So, between 2017 and 2018, you will be paying around €103 less in USC if you earn €40,000 a year.

Overall

Adding the two together, that results in savings of around €250 a year for earners on €40k a year.

With these measures, the government is giving you an extra €5 in your pocket a week in 2018.

Overall Saving – €253

Other

There are other measures contained within the Budget that may be relevant to you.

Self-employed people have been given a €200 increase in Earned Income Credit, which Donohoe said would affect 147,000 people.

Looking further afield, there was a €5 increase across the board in social welfare payments from March, so this will affect things like carers’ allowance and disability allowance.

If you have children, the government has pledged €20 million to support a range of measures including the extended free pre-school programme, ensuring entitlement to a full two-year service.

If you have a penchant for sugar drinks, the government has announced a 30c tax per litre on drinks with over eight grams of sugar per 100 millilitres.

And, if you smoke, a pack of cigarettes has gone up by 50 cent – to €12.

Want to see how Budget 2018 will affect your pocket? Use our calculator to find out.

Read: All weekly social welfare payments to increase by a fiver from March

Read: More money in your pocket with cuts to USC and change to higher tax band

  • Share on Facebook
  • Email this article
  •  

About the author:

Sean Murray

Read next:

COMMENTS (42)

This is YOUR comments community. Stay civil, stay constructive, stay on topic. Please familiarise yourself with our comments policy here before taking part.
write a comment

    Leave a commentcancel