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BUDGET 2019

Tax Policy Changes

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BUDGET 2019

TAX POLICY CHANGES

CONTENTS

Page

1. Summary of 2019 Budget Measures – Policy Changes 1

Taxation Measures for introduction in 2019 3

2. Taxation Annex to the Summary of 2019 Budget Measures 9

Annex A A distributional analysis of Budget 2019 Measures on a variety of household family types across a range of income levels

10

Additional information and related documents are available on the Budget 2019 website (www.budget.gov.ie)

http://www.budget.gov.ie/

Department of Finance | Tax Policy Changes Page | 1

SUMMARY OF 2019 BUDGET MEASURES

POLICY CHANGES

CONTENTS

Page

Taxation Measures for introduction in 2019 3

USC 3

Income Tax 3

Excise Duties 3

Other Income Tax 4

VAT 5

Capital Acquisitions Tax 6

Compliance Measures 6

Corporation Tax 6

Stamp Duty

Employer’s PRSI

7

7

National Training Fund Levy 7



Summary of Budget 2019 Measures – Policy Changes

Taxation Measures for Introduction in 2019

Measure

Yield/Cost

2019

Yield/Cost

Full Year

USC The following changes to USC will apply from 1 January 2019.

€502 increase to €19,372 band ceiling

4.75% rate reduced to 4.5%

Total cost of USC measures The increase in the 2% rate band ceiling will ensure that a full-time adult worker who benefits from the increase in the hourly minimum wage rate from €9.55 to €9.80 will remain outside the top rates of USC. The reduction in the third rate of USC will ensure that the marginal tax rate on incomes up to €70,044 is reduced from 48.75% to 48.5%. USC Rates & Bands from 1 January 2019: Incomes of €13,000 are exempt. Otherwise:

€0 – €12,012 @ 0.5%

€12,012 – €19,874 @ 2%

€19,874 – €70,044 @ 4.5%

€70,044+ @ 8%

Self-employed income over €100,000: 3% surcharge

-€105m

-€123m

Income Tax

An increase of €750 in the income tax standard rate band for all earners, from €34,550 to €35,300 for single individuals and from €43,550 to €44,300 for married one earner couples.

An increase in the Home Carer Tax Credit from €1,200 to €1,500. An increase in the Earned Income Credit from €1,150 to €1,350.

-€138m

-€21m

-€27m

-€161m

-€24m

-€48m

Excise Duties

The excise duty on a packet of 20 cigarettes is being increased by 50

cents (including VAT) with a pro-rata increase on the other tobacco

products; and there will be an additional 25c on roll your own

tobacco. Both measures will take effect from midnight on 9 October

2018.

+ €59.4m

+ €59.4m


Minimum Excise Duty

There will be an increase in Minimum Excise Duty on tobacco

products so that all cigarettes sold below €11 will have the same

excise applied as cigarettes sold at €11. This will also take effect

from midnight on 9 October 2018.

Betting Duty

An increase in the betting duty on bets placed by customers in the State will provide the additional yield:

from 1% to 2% for all bookmakers and

from 15% to 25% on the commission earned by betting intermediaries

Vehicle Registration Tax

Diesel Surcharge

A 1% VRT surcharge is being brought in for diesel engine passenger

vehicles registering in the State from 1 January 2019.

Extension of VRT relief for hybrid and plug-in hybrid vehicles

The VRT relief available for conventional hybrids and plug-in electric

hybrids is being extended for a period of one year, until end 2019.

Extension of 0% BIK rate for electric vehicles

The 0% Benefit-in-kind rate for electric vehicles is being extended

for a period of 3 years, with a cap of €50,000 on the Original Market

Value of the vehicle.

+ €2.4m

+€39.5m

+€25m

-€16m

-€3m

+ €2.4m

+€51.6m

+€25m

-€16m

-€3m

Other Income Tax

The increase in the amount of interest paid in respect of loans used

to purchase, improve or repair a residential property that may be

deducted by landlords will be accelerated to 100% from 1 January

2019.

Key Employee Engagement Programme (KEEP) A share-based remuneration incentive to facilitate the use of share-based remuneration by unquoted SME companies to attract key employees. Gains arising to employees on the exercise of KEEP share options will be liable to Capital Gains Tax on disposal of the shares, in place of the current liability to income tax, USC and PRSI on exercise. This incentive is available for qualifying share options granted between 1 January 2018 and 31 December 2023.

-€10m

€0m

-€18m

-€10m


Three separate measures:

to increase the ceiling on maximum annual market value of shares that may be awarded to equal the amount of the salary (up from 50%);

to replace the three-year limit with a lifetime limit; and

to increase the quantum of share options that can be granted under the scheme from €250,000 to €300,000.

AGRITAXATION

Income Averaging (removal of restrictions relating to farmers with off-farm income)

Income averaging allows eligible farmers to calculate their

taxable income as the average of their income in the current

year and the previous four years, on a rolling basis, thus

smoothing their tax liability over a 5 year cycle.

Stock relief (extended for 3yrs until end 2021)

Stock relief is a long-standing farming tax relief that

encourages investment in improving stock quality and thus

output. There are three separate measures:

the 25% General Stock Relief on Income Tax;

the 50% Stock Relief on Income Tax for Registered Farm Partnerships; and

the 100% Stock Relief on Income Tax for Certain Young Trained Farmers (YTF).

-€1m

-€8m

-€2.5m

-€8m

VAT

VAT rate on tourism activities to increase to 13.5%, with the exception of newspapers and sporting facilities

Services and goods currently applying at 9% will increase to 13.5% from 1 January 2019. With economic analysis indicating that there is a decline in competitiveness in the sector, it has been decided to increase these activities to the 13.5% rate.

Newspapers and sports facilities, however, will be retained at the 9% VAT rate.

VAT rate on electronically supplied publications reduced from 23% to 9%

The VAT rate on e-books and electronically supplied newspapers is being reduced from 23% to 9% with effect from 1 January 2019. This follows recent agreement among EU Finance Ministers to allow Member States apply reduced VAT rates on digital publications.

+€466m

-€6m

+€560m

-€8m


Capital Acquisitions Tax

Increase Group A threshold to €320,000

The current Group A tax free threshold which applies primarily to gifts and inheritances from parents to their children is being increased from €310,000 to €320,000. This increase applies in respect of gifts or inheritances received on or after the 10th of October. The cost of this change is estimated to be -€6.9 million in 2019 (as payments for CAT relate to inheritances from 1 September to 31 August each year). The full year cost, from 2020 onwards, is estimated to be €8.1 million.

- €6.9m

- €8.1m

Compliance

Employer PAYE Compliance Implementation

Revenue’s updated PAYE system will be fully operational from 1

January 2019. Once implemented, this system is expected to yield

additional Exchequer savings arising from increased compliance

levels of taxpayers.

+€50m

+€50m

Corporation Tax

Film Relief The scheme provides relief in the form of a corporation tax credit related to the cost of production of certain films. The credit is granted at a rate of 32% of qualifying expenditure which is capped at €70 million. The credit was due to expire at the end of 2020 and will now be extended until 2024. A new, short-term, tapered regional uplift commencing at 5% is also being introduced, subject to State aid approval, for productions being made in areas designated under the State aid regional guidelines.

Three Year Start Up Relief (Section 486C) Three Year Start Up Relief provides corporation tax relief for profit-making start-up companies which create and maintain jobs. The relief is being extended a further three years, until the end of 2021.

Accelerated Capital Allowances for Employer-Provided Fitness and Childcare Facilities This measure, introduced in Finance Act 2017, is being amended and commenced with effect from 1 January 2019. Its purpose is to incentivise employers to provide fitness and/or childcare facilities for the use of their employees, by providing an accelerated deduction for the capital investment costs incurred (certain of which are currently allowed over 8 years).

-€2m

-€5.7m

-€1.9m

-€5m

-€5.7m

-€0.6m


Accelerated Capital Allowances for Gas-Propelled Vehicles and Refuelling Equipment This is a measure to encourage investment in gas-propelled vehicles and refuelling equipment. The use of natural gas and biogas as a substitute for diesel is seen as a more environmentally friendly fuel for large vehicles such as HGVs and busses. This measure provides for the acceleration of existing allowances and therefore is cost-neutral over the lifespan of the assets.

Corporation Tax – Anti Tax Avoidance Directive

Exit Tax As part of Ireland’s commitment to implementing the Anti-Tax

Avoidance Directive (ATAD), Budget 2019 introduces a new ATAD

compliant exit tax regime from Budget night. It will tax unrealised

capital gains where companies migrate or transfer assets offshore

such that they leave the scope of Irish tax. The rate for the new

ATAD compliant exit tax will be set at 12.5%. Early introduction of

this measure will provide certainty to businesses currently located

in Ireland and considering investing in Ireland in the future.

Controlled Foreign Company (CFC) Rules The Finance Bill will also provide for the introduction of a Controlled Foreign Company (CFC) regime as required by the ATAD. CFC rules are an anti-abuse measure, designed to prevent the diversion of profits to offshore entities (the CFCs) in low- or no-tax jurisdictions. CFC rules are traditionally a feature of territorial tax regimes. As Ireland has a worldwide tax regime, CFC rules have not previously been a feature of the Irish corporate tax regime

-€1m

€0m

€0m

€0m

€0m

€0m

Stamp Duty

Extension of Young Trained Farmers Stamp duty Relief (section 81AA SDCA 1999) for a further three years to 31/12/2021

- €15m

- €15m

Employer’s PRSI From 1 January 2019 the weekly income threshold for the higher

rate of employer’s PRSI will increase from €376 to €386.

This follows a recommendation of the Low Pay Commission to

ensure that the increase in the hourly minimum wage does not

lead to work disincentives for workers, in particular those seeking

to work full-time.

Increase in employer contribution to National Training Fund

levy From 1 January 2019 there will be a 0.1% increase (from 0.8% to

0.9%) in the National Training Fund levy payable by employers in

-€2.5m

+€69m

-€3m

+€77m


respect of reckonable earnings of employees in Class A and Class H

employments.

From 1 January 2020 there will be a further 0.1% increase (from

0.9% to 1.0%) in the National Training Fund Levy payable by

employers in respect of reckonable earnings of employees in Class

A and Class H employments. This will yield an additional €74m in

2020 and €81m full year yield.


TAXATION ANNEX TO THE SUMMARY

OF 2019

BUDGET MEASURES

CONTENTS

Page

Annex A 10

A distributional analysis of Budget 2019 Measures on a variety of household family types across a range of income levels


Annex A

A distributional analysis of Budget 2019 Measures on a variety of

household family types across a range of income levels.

Introduction

This Annex presents a range of information that illustrates the effect of the Budget measures on

different categories of income earners and household types. Distribution tables show the impact

of Budget measures for different family types – single individuals, married couples, families with

children - across a range of income levels from €12,000 to €175,000.

The examples are based on specimen incomes from both employment and self-employment

sources. These cases deal with basic personal tax credits, the PAYE employee tax credit, earned

income tax credit, the home carer credit, the age credit and age exemption limits, the standard rate

bands, PRSI and the Universal Social Charge (USC). Social welfare payments such as the State

pension and Child Benefit are included, where relevant. Variations can arise due to rounding.

There are also tables showing the average effective tax rate for different household types with

employment and self-employment income for the years 2004 to 2019.

Information is also provided on the distribution of income earners for Income Tax purposes on a

2018 and a post-Budget 2019 basis. This shows a breakdown of the number and percentage of

income earners who are: exempt from Income Tax; paying Income Tax at the standard rate; and

paying Income Tax at the higher rate.

A number of illustrative cases are also provided to demonstrate the impact of the Budget changes

across a broader range of family types and income sources.

This complements other analyses that are undertaken aimed at integrating equality and

distributional considerations into the Budget process as set out in Annex 2 of the Economic and

Fiscal Outlook Budget Book, which provides a broader examination of income tax and progressivity

issues.

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(i) Examples showing the effects of Budget changes on different categories of single and married income earners

Example 1

Single person, no children, private sector employee taxed under PAYE, Full rate PRSI contributor

Gross Income Income Tax PRSI Universal Social Charge

Total Change Change as % of

Net Income

Effective Tax Rate

Existing Min Wage

New Existing Proposed Existing Proposed Existing Proposed Per Year

Per Week

Existing Proposed

€ Increase € € € € € € € € € % %

12,000 314 12,314 0 0 0 0 0 0 314 6 2.6% 0.0% 0.0%

15,000 393 15,393 0 0 0 0 120 128 385 7 2.6% 0.8% 0.8%

18,000 471 18,471 300 394 0 143 180 189 225 4 1.3% 2.7% 3.9%

20,000 0 20,000 700 700 459 459 237 223 14 0 0.1% 7.0% 6.9%

25,000 0 25,000 1,700 1,700 1,000 1,000 475 448 27 1 0.1% 12.7% 12.6%

30,000 0 30,000 2,700 2,700 1,200 1,200 712 673 39 1 0.2% 15.4% 15.2%

35,000 0 35,000 3,790 3,700 1,400 1,400 950 898 142 3 0.5% 17.5% 17.1%

45,000 0 45,000 7,790 7,640 1,800 1,800 1,425 1,348 227 4 0.7% 24.5% 24.0%

55,000 0 55,000 11,790 11,640 2,200 2,200 1,900 1,798 252 5 0.6% 28.9% 28.4%

75,000 0 75,000 19,790 19,640 3,000 3,000 3,011 2,871 289 6 0.6% 34.4% 34.0%

100,000 0 100,000 29,790 29,640 4,000 4,000 5,011 4,871 289 6 0.5% 38.8% 38.5%

150,000 0 150,000 49,790 49,640 6,000 6,000 9,011 8,871 289 6 0.3% 43.2% 43.0%

175,000 0 175,000 59,790 59,640 7,000 7,000 11,011 10,871 289 6 0.3% 44.5% 44.3%

Note 1: Assuming that employees currently earning less than €19,367 p.a. earn all their income at the minimum wage and will therefore benefit from an increase of 2.6% (€9.55 to €9.80 per hour) in their gross income.

Note 2: Variations can arise due to rounding.

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Example 2

Married couple, one income, no children, private sector employee taxed under PAYE, Full rate PRSI contributor


Total Change Change as % of

Net Income

Effective Tax Rate

Existing Min Wage

New Existing Proposed Existing Proposed Existing Proposed Per Year

Per Week

Existing Proposed

€ Increase € € € € € € € € € % %

12,000 314 12,314 0 0 0 0 0 0 314 6 2.6% 0.0% 0.0%

14,000 366 14,366 0 0 0 0 100 107 359 7 2.6% 0.7% 0.7%

18,000 471 18,471 0 0 0 143 180 189 319 6 1.8% 1.0% 1.8%

20,000 0 20,000 0 0 459 459 237 223 14 0 0.1% 3.5% 3.4%

25,000 0 25,000 50 50 1,000 1,000 475 448 27 1 0.1% 6.1% 6.0%

30,000 0 30,000 1,050 1,050 1,200 1,200 712 673 39 1 0.1% 9.9% 9.7%

35,000 0 35,000 2,050 2,050 1,400 1,400 950 898 52 1 0.2% 12.6% 12.4%

45,000 0 45,000 4,340 4,190 1,800 1,800 1,425 1,348 227 4 0.6% 16.8% 16.3%

55,000 0 55,000 8,340 8,190 2,200 2,200 1,900 1,798 252 5 0.6% 22.6% 22.2%

70,000 0 70,000 14,340 14,190 2,800 2,800 2,612 2,473 289 6 0.6% 28.2% 27.8%

100,000 0 100,000 26,340 26,190 4,000 4,000 5,011 4,871 289 6 0.4% 35.4% 35.1%

150,000 0 150,000 46,340 46,190 6,000 6,000 9,011 8,871 289 6 0.3% 40.9% 40.7%

175,000 0 175,000 56,340 56,190 7,000 7,000 11,011 10,871 289 6 0.3% 42.5% 42.3%



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Example 3

Married couple, one income, two children, private sector employee taxed under PAYE, Full rate PRSI contributor


Working Family Payment

Child Benefit Total Change (including Working Family

Payment and Child Benefit)

Change as % of

Net Income

Effective Tax Rate

Existing Min Wage

New Existing Proposed Existing Proposed Existing Proposed Existing Proposed Existing Proposed Per Year

Per Week

Existing Proposed

€ Increase € € € € € € € € € € € € € % %

12,000 314 12,314 0 0 0 0 0 0 12,220 12,064 3,360 3,360 158 3 0.7% 0.0% 0.0%

14,000 366 14,366 0 0 0 0 100 107 11,076 10,868 3,360 3,360 151 3 0.6% 0.7% 0.7%

18,000 471 18,471 0 0 0 143 180 189 8,736 8,528 3,360 3,360 111 2 0.4% 1.0% 1.8%

20,000 0 20,000 0 0 459 459 237 223 7,852 7,852 3,360 3,360 14 0 0.1% 3.5% 3.4%

25,000 0 25,000 0 0 1,000 1,000 475 448 5,304 5,304 3,360 3,360 27 1 0.1% 5.9% 5.8%

35,000 0 35,000 850 550 1,400 1,400 950 898 1,040 1,040 3,360 3,360 352 7 1.1% 9.1% 8.1%

45,000 0 45,000 3,140 2,690 1,800 1,800 1,425 1,348 0 0 3,360 3,360 527 10 1.4% 14.1% 13.0%

55,000 0 55,000 7,140 6,690 2,200 2,200 1,900 1,798 0 0 3,360 3,360 552 11 1.3% 20.4% 19.4%

70,000 0 70,000 13,140 12,690 2,800 2,800 2,612 2,473 0 0 3,360 3,360 589 11 1.1% 26.5% 25.7%

100,000 0 100,000 25,140 24,690 4,000 4,000 5,011 4,871 0 0 3,360 3,360 589 11 0.9% 34.2% 33.6%

150,000 0 150,000 45,140 44,690 6,000 6,000 9,011 8,871 0 0 3,360 3,360 589 11 0.7% 40.1% 39.7%

175,000 0 175,000 55,140 54,690 7,000 7,000 11,011 10,871 0 0 3,360 3,360 589 11 0.6% 41.8% 41.5%


Note 2: Includes the impact of the Working Family Payment where relevant.

Note 3: For illustrative purposes, assumes Working Family Payment applies for 52 weeks in 2019.


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Example 4

Single person, no children, taxed under Schedule D (self-employed)

Gross Income

Income Tax PRSI Universal Social Charge

Total Change Change as % of Net Income

Effective Tax Rate

Existing Proposed Existing Proposed Existing Proposed Per Year Per Week Existing Proposed

€ € € € € € € € € % %

12,000 0 0 500 500 0 0 0 0 0.0% 4.2% 4.2%

14,000 0 0 560 560 100 100 0 0 0.0% 4.7% 4.7%

18,000 800 600 720 720 180 180 200 4 1.2% 9.4% 8.3%

20,000 1,200 1,000 800 800 237 223 214 4 1.2% 11.2% 10.1%

25,000 2,200 2,000 1,000 1,000 475 448 227 4 1.1% 14.7% 13.8%

30,000 3,200 3,000 1,200 1,200 712 673 239 5 1.0% 17.0% 16.2%

35,000 4,290 4,000 1,400 1,400 950 898 342 7 1.2% 19.0% 18.0%

45,000 8,290 7,940 1,800 1,800 1,425 1,348 427 8 1.3% 25.6% 24.6%

55,000 12,290 11,940 2,200 2,200 1,900 1,798 452 9 1.2% 29.8% 29.0%

70,000 18,290 17,940 2,800 2,800 2,612 2,473 489 9 1.1% 33.9% 33.2%

100,000 30,290 29,940 4,000 4,000 5,011 4,871 489 9 0.8% 39.3% 38.8%

150,000 50,290 49,940 6,000 6,000 10,511 10,371 489 9 0.6% 44.5% 44.2%

175,000 60,290 59,940 7,000 7,000 13,261 13,121 489 9 0.5% 46.0% 45.7%

Note: Variations can arise due to rounding

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Example 5

Married couple, one income, no children, taxed under Schedule D (self-employed)

Gross Income

New

Income Tax PRSI Universal Social Charge Total Change Change as % of Net Income

Effective Tax Rate

Existing Proposed Existing Proposed Existing Proposed New Existing Existing Proposed

€ € € € € € € € € € €

12,000 0 0 500 500 0 0 0 0 0.0% 4.2% 4.2%

14,000 0 0 560 560 100 100 0 0 0.0% 4.7% 4.7%

18,000 0 0 720 720 180 180 0 0 0.0% 5.0% 5.0%

20,000 0 0 800 800 237 223 14 0 0.1% 5.2% 5.1%

25,000 550 350 1,000 1,000 475 448 227 4 1.0% 8.1% 7.2%

30,000 1,550 1,350 1,200 1,200 712 673 239 5 0.9% 11.5% 10.7%

35,000 2,550 2,350 1,400 1,400 950 898 252 5 0.8% 14.0% 13.3%

45,000 4,840 4,490 1,800 1,800 1,425 1,348 427 8 1.2% 17.9% 17.0%

55,000 8,840 8,490 2,200 2,200 1,900 1,798 452 9 1.1% 23.5% 22.7%

70,000 14,840 14,490 2,800 2,800 2,612 2,473 489 9 1.0% 28.9% 28.2%

100,000 26,840 26,490 4,000 4,000 5,011 4,871 489 9 0.8% 35.9% 35.4%

150,000 46,840 46,490 6,000 6,000 10,511 10,371 489 9 0.6% 42.2% 41.9%

175,000 56,840 56,490 7,000 7,000 13,261 13,121 489 9 0.5% 44.1% 43.8%


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Example 6

Married couple, one income, two children, taxed under Schedule D (self-employed)

Gross Income

Income Tax PRSI Universal Social Charge

Child Benefit

Total Change Change as % of Net Income

Effective Tax Rate

Existing Proposed Existing Proposed Existing Proposed Existing Proposed Per Year Per Week Existing Proposed

€ € € € € € € € € € % %

12,000 0 0 500 500 0 0 3,360 3,360 0 0 0.0% 4.2% 4.2%

14,000 0 0 560 560 100 100 3,360 3,360 0 0 0.0% 4.7% 4.7%

18,000 0 0 720 720 180 180 3,360 3,360 0 0 0.0% 5.0% 5.0%

20,000 0 0 800 800 237 223 3,360 3,360 14 0 0.1% 5.2% 5.1%

25,000 0 0 1,000 1,000 475 448 3,360 3,360 27 1 0.1% 5.9% 5.8%

30,000 350 0 1,200 1,200 712 673 3,360 3,360 389 7 1.3% 7.5% 6.2%

35,000 1,350 850 1,400 1,400 950 898 3,360 3,360 552 11 1.6% 10.6% 9.0%

45,000 3,640 2,990 1,800 1,800 1,425 1,348 3,360 3,360 727 14 1.8% 15.3% 13.6%

55,000 7,640 6,990 2,200 2,200 1,900 1,798 3,360 3,360 752 14 1.6% 21.3% 20.0%

70,000 13,640 12,990 2,800 2,800 2,612 2,473 3,360 3,360 789 15 1.5% 27.2% 26.1%

100,000 25,640 24,990 4,000 4,000 5,011 4,871 3,360 3,360 789 15 1.1% 34.7% 33.9%

150,000 45,640 44,990 6,000 6,000 10,511 10,371 3,360 3,360 789 15 0.9% 41.4% 40.9%

175,000 55,640 54,990 7,000 7,000 13,261 13,121 3,360 3,360 789 15 0.8% 43.4% 42.9%


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(ii) AVERAGE EFFECTIVE TAX RATES ON ANNUAL EARNINGS IN % TERMS*

FULL RATE PRSI

FULL RATE PRSI

SINGLE

Gross Income € 2004 2005 2006 2007 2008 2009

2009(s) /2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

15,000 5.2% 3.2% 0.0% 0.0% 0.0% 0.0% 0.0% 2.7% 2.7% 2.7% 2.7% 1.9% 1.4% 0.9% 0.8% 0.8%

20,000 11.9% 8.4% 7.1% 5.1% 4.4% 5.4% 6.4% 9.8% 9.8% 11.1% 11.1% 10.2% 7.8% 7.2% 7.0% 6.9%

25,000 14.7% 13.5% 12.5% 10.9% 8.3% 9.3% 10.3% 14.0% 14.0% 15.1% 15.1% 14.4% 13.5% 13.0% 12.7% 12.6%

30,000 18.1% 16.0% 14.7% 13.4% 12.9% 13.9% 16.9% 16.8% 16.8% 17.7% 17.7% 17.1% 16.1% 15.6% 15.4% 15.2%

40,000 25.5% 24.0% 21.9% 19.7% 18.6% 19.1% 22.1% 24.2% 24.2% 24.8% 24.8% 23.7% 22.6% 22.1% 21.4% 20.9%

60,000 32.0% 31.1% 29.8% 28.1% 27.5% 28.2% 31.7% 33.4% 33.4% 33.9% 33.9% 32.8% 31.6% 31.1% 30.5% 30.1%

100,000 36.9% 36.3% 35.6% 34.2% 33.8% 34.6% 39.2% 40.9% 40.9% 41.1% 41.1% 40.4% 39.5% 39.1% 38.8% 38.5%

120,000 38.1% 37.6% 37.0% 35.7% 35.4% 36.5% 41.1% 42.7% 42.7% 42.9% 42.9% 42.3% 41.6% 41.3% 41.0% 40.8%

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FULL RATE PRSI

FULL RATE PRSI

MARRIED / CIVIL PARTNER, ONE INCOME, TWO CHILDREN

Gross Income € 2004 2005 2006 2007 2008 2009

2009(s) /2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

15,000 2.2% 2.2% 0.0% 0.0% 0.0% 0.0% 0.0% 2.7% 2.7% 2.7% 2.7% 1.9% 1.4% 0.9% 0.8% 0.8%

20,000 4.7% 2.7% 2.7% 2.7% 2.7% 3.7% 4.7% 6.3% 6.3% 7.6% 7.6% 6.7% 4.3% 3.7% 3.5% 3.4%

25,000 5.5% 4.9% 4.9% 4.9% 2.9% 3.9% 4.9% 7.2% 7.2% 8.3% 8.3% 7.6% 6.7% 6.2% 5.9% 5.8%

30,000 9.0% 7.8% 6.7% 5.1% 5.1% 6.1% 9.1% 8.6% 8.6% 9.5% 9.5% 8.9% 7.3% 6.6% 6.4% 6.2%

40,000 14.9% 13.2% 11.5% 10.2% 9.4% 10.4% 13.4% 14.2% 14.2% 14.9% 14.9% 14.5% 12.9% 12.1% 11.6% 10.7%

60,000 24.8% 23.9% 22.5% 20.8% 19.8% 20.5% 24.0% 26.2% 26.2% 26.6% 26.6% 25.7% 24.1% 23.5% 22.8% 21.9%

100,000 32.6% 32.0% 31.2% 29.7% 29.2% 30.0% 34.6% 36.5% 36.5% 36.8% 36.8% 36.1% 35.0% 34.6% 34.2% 33.6%

120,000 34.5% 34.0% 33.3% 32.0% 31.6% 32.6% 37.2% 39.1% 39.1% 39.3% 39.3% 38.8% 37.9% 37.5% 37.1% 36.6%

*Average Effective Tax Rates 2001-2010: Total of Income Tax, Levies (Income and Health) and PRSI as a proportion of gross income.

Average Effective Tax Rates 2011-2019: Total of Income Tax, PRSI and Universal Social Charge as a proportion of gross income.

Calculations only account for the standard employee credit, personal income tax credit and home carer credit, where relevant.

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AVERAGE EFFECTIVE TAX RATES ON ANNUAL EARNINGS IN % TERMS*

SELF EMPLOYED

SELF EMPLOYED

SINGLE

Gross Income € 2004 2005 2006 2007 2008 2009

2009(s) /2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

15,000 12.9% 12.5% 12.1% 11.3% 10.8% 10.8% 10.8% 15.7% 15.7% 15.7% 15.7% 14.9% 10.7% 7.6% 6.1% 4.8%

20,000 17.4% 15.1% 14.9% 14.2% 13.9% 14.9% 15.9% 19.3% 19.3% 19.3% 19.3% 18.5% 15.0% 12.5% 11.2% 10.1%

25,000 18.9% 18.7% 18.5% 18.0% 15.7% 16.7% 17.7% 21.7% 21.7% 21.7% 21.7% 21.0% 17.9% 15.8% 14.7% 13.8%

30,000 21.4% 20.2% 19.6% 19.1% 18.9% 19.9% 22.9% 23.2% 23.2% 23.2% 23.2% 22.6% 19.8% 18.0% 17.0% 16.2%

40,000 27.8% 26.9% 25.3% 23.8% 22.8% 23.3% 26.3% 29.0% 29.0% 29.0% 29.0% 27.8% 25.3% 23.8% 22.7% 21.7%

60,000 34.2% 33.6% 32.6% 31.2% 30.6% 31.2% 34.2% 36.6% 36.6% 36.6% 36.6% 35.6% 33.4% 32.2% 31.4% 30.6%

100,000 39.3% 39.0% 38.3% 37.1% 36.7% 37.5% 41.3% 42.8% 42.8% 42.8% 42.8% 42.0% 40.6% 39.8% 39.3% 38.8%

120,000 40.6% 40.3% 39.8% 38.7% 38.4% 39.4% 43.2% 44.8% 44.8% 44.8% 44.8% 44.2% 43.0% 42.4% 41.9% 41.5%

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SELF EMPLOYED

SELF EMPLOYED

MARRIED / CIVIL PARTNER, ONE INCOME, TWO CHILDREN

Gross Income € 2004 2005 2006 2007 2008 2009

2009(s) /2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

15,000

3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 6.7% 6.7% 6.7% 6.7% 5.9% 5.4% 4.9% 4.8% 4.8%

20,000

6.0% 3.4% 3.0% 3.0% 3.0% 4.0% 5.0% 7.6% 7.6% 7.6% 7.6% 6.7% 6.0% 5.5% 5.2% 5.1%

25,000

9.8% 9.3% 8.9% 7.8% 4.8% 5.8% 6.8% 11.8% 11.8% 11.8% 11.8% 11.1% 7.3% 6.2% 5.9% 5.8%

30,000

12.3% 11.9% 11.6% 10.7% 9.8% 10.8% 13.8% 15.0% 15.0% 15.0% 15.0% 14.4% 11.0% 8.8% 7.5% 6.2%

40,000

17.1% 16.1% 14.9% 14.3% 13.6% 14.6% 17.6% 19.0% 19.0% 19.0% 19.0% 18.6% 15.6% 13.9% 12.8% 11.4%

60,000

27.1% 26.4% 25.3% 23.8% 22.9% 23.5% 26.5% 29.4% 29.4% 29.4% 29.4% 28.5% 26.0% 24.6% 23.6% 22.4%

100,000

35.1% 34.6% 34.0% 32.7% 32.1% 32.9% 36.7% 38.4% 38.4% 38.4% 38.4% 37.8% 36.1% 35.3% 34.7% 33.9%

120,000

37.0% 36.7% 36.1% 35.0% 34.5% 35.5% 39.4% 41.2% 41.2% 41.2% 41.2% 40.6% 39.3% 38.6% 38.0% 37.4%

*Average Effective Tax Rates 2001-2010: Total of Income Tax, Levies (Income and Health) and PRSI as a proportion of gross income.

Average Effective Tax Rates 2011-2019: Total of Income Tax, PRSI and Universal Social Charge as a proportion of gross income.

Calculations only account for the personal income tax credit, earned income credit and home carer credit, where relevant.

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(iii) ESTIMATED DISTRIBUTION OF INCOME EARNERS ON THE INCOME TAX FILE FOR 2018 AND 2019

Exempt (standard rate

liability covered by credits

or age exemption limits)

Paying tax at the standard

rate* (including those whose

liability at the higher rate is

fully offset by credits)

Higher rate liability NOT

fully offset by credits Total

2018 913,400

34.25%

1,144,600

42.93%

608,600

22.82% 2,666,500

2019 on a post

budget basis

941,700

34.58%

1,205,300

44.26%

576,500

21.17% 2,723,500

Note 1: Distributions are estimates from the Revenue tax-forecasting model using actual data for the year 2016, adjusted as necessary for income and employment trends in the interim.

Note 2: Figures are provisional and likely to be revised.

Note 3: A jointly assessed married couple/civil partnership is treated as one tax unit


(iv) ILLUSTRATIVE CASES1

Example 1

Aileen is a self-employed electrician earning €20,000. She will see a gain of €214 in her annual net income

due to this Budget.

Example 1 Single, self-employed worker

2018 2019

€ €

Gross Income 20,000 20,000

Income tax liability

1,200 1,000

PRSI liability 800 800

USC liability 237 223

Total tax liability 2,237 2,023

Net Income 17,763 17,977

Annual Gain 214

Change as a % of Net Income 1.21%

1 Provided for illustrative purposes only and variations may occur due to rounding

Net Earnings, €17,977

Income Tax, €1,000

USC, €223 PRSI, €800

Aileen - 2019 Gross Earned Income €20,000

Net Earnings

Income Tax

USC

PRSI


Example 2

Niamh is a part-time student who also works 30 hours a week on the minimum wage in retail. Niamh will see a gain of €382 in her annual net income due to this Budget and the 2019 increase in the National Minimum Wage.

Example 2 Single, part-time minimum wage worker

2018 2019

€ €


Minimum Wage increase 390

New Gross Income 15,288

Income tax liability 0 0

PRSI liability 0 0


Total tax liability 118 126

Net Income 14,780 15,162

Annual Gain 382



USC, €126

Niamh - 2019 Gross Earned Income €15,288

Net Earnings

USC


Example 3

Ray and Paula are married. Ray is employed in the IT sector and earns €45,000 per annum. Paula works in the family home. They have two children, Robert and Leo both aged under 12. The family will see a gain of €527 in their annual net income from Budget 2019.

Example 3 Married, 1 earner family with children

2018 2019

€ €


Income tax liability 3,140 2,690

PRSI liability 1,800 1,800

USC liability 1,425 1,348


Child Benefit 3,360 3,360

Net Income 41,995 42,522

Annual Gain 527


Net Earnings, €42,552Income Tax,

€2,690

USC, €1,348

PRSI, €1,800 Child Benefit, €3,360

Ray and Paula- 2019 Gross Earned Income €45,000

Net Earnings

Income Tax

USC

PRSI

Child Benefit


Example 4a

Pamela is a single public sector worker earning €60,000 who joined the public sector in 2012. She will see an increase of €615 in her net income as a result of this Budget and the Public Service Stability Agreement.

Example 4a Single Civil Servant, Pre-2013

2018 2019

€ €


Public Service Stability Agreement Pay Increase 350

New Gross Income 60,350 Pension contribution 3,019 3,023

Pension related deduction 3,125 -

Additional superannuation contribution - 2,836





Net Income 37,987 38,603

Annual Gain 615




USC, €2,038

PRSI, €2,414

Additional superannuation

contribution, €2,836 Pension Contribution, €3,023

Pamela - 2019 Gross Earned Income €60,350

Net Earnings

Income Tax

USC

PRSI

Additional superannuation contribution

Pension Contribution


Example 4b

Dermot works in the private sector, earns €60,000 and makes a 5% annual pension contribution. In 2019 he will receive a pay increase of 2%. He will see a gain of €846 in his annual net income as a result of this Budget and his pay increase.

Example 4b Single Private Sector Worker

2018 2019

€ €


Pay increase 1,200

New Gross Income 61,200 Pension contribution 3,000 3,060





Net Income 39,873 40,719

Annual Gain 846




USC, €2,077

PRSI, €2,448

Pension contribution,

€3,060

Dermot - 2019 Gross Earned Income €61,200

Net Earnings

Income Tax

USC

PRSI

Pension Contribution


Example 4c

Caitriona is a single teacher earning €40,000 who joined the public sector in 2013. She will see an increase of €682 in her net income as a result of this Budget and the Public Service Stability Agreement.

Example 4c Post 2013 Teacher

2018 2019

€ €




Pension Contribution 1,718 1,715 Pension Related Deduction/Additional Superannuation Contribution 1,125 549





Net income 29,718 30,400

Annual Gain Gain as a % of net income

682

2.3%



USC, €1,133

PRSI, €1,609

Additional Superannuation

Contribution, €548 Pension Contribution, €1,715

Caitriona - Gross Income €40,233

Net Earnings

Income Tax

USC

PRSI

AdditionalSuperannuationContribution

PensionContrib.


Example 5

Hazel and Terry are married. Hazel works as a self- employed graphic designer earning €35,000. Terry works in the service industry earning €45,000. Hazel has a physical disability and has a trained assistance dog, Patrick, supplied by an organisation accredited by Assistance Dogs Europe. The family will see a gain of €628 in their annual net income due to this Budget.

Example 5 Married, 2 earner family no children

2018 2019

€ €






Net income 62,511 63,139

Annual Gain 628

Gain as a % of net income 1.01%



USC, € 2,245.94

PRSI, €3,200

Hazel and Terry - 2019 Gross Income €80,000

Net Earnings

Income Tax

USC

PRSI


Example 6

Mairéad is 78 and receives the contributory State Pension and has an occupational pension of €15,000. Mairéad will see a gain of €212 in her annual net income due to this Budget.

Example 6 Single Pensioner

2018 2019

€ €

State Pension 12,592 12,857

Living Alone payment 468 468

Occupational Pension 15,000 15,000

Total Income 28,060 28,325


PRSI liability 0 0



Net income 25,873 26,085


212

0.82%

Net Pension, €26,085


USC, €120

Mairéad - 2019 Gross Income €28,325

Net Pension

Income Tax

USC


Example 7a

Laura is a single public servant who started in 2015 earning €25,000. She will see an increase of €299 in her net income as a result of this Budget and the Public Service Stability Agreement.

Example 7a Single public sector worker, post-2013

2018 2019

€ €



25,397

Pension Contribution 750 762 Pension Related Deduction/Additional Superannuation Contribution 0 0





Net income 21,075 21,374


299

1.42%

Net Earnings, €21,374Income Tax, €1,779

USC, €466

PRSI, €1,016Pension Contribution, €762

Laura- 2019 Gross Earned Income €25,397

Net Earnings

Income Tax

USC

PRSI

Pension Contrib.


Example 7b

Fiona is an executive assistant who earns €25,000 and makes a 5% pension contribution each year. In 2019 she will receive a pay increase of 2%. Fiona will see a gain of €360 in her annual net income as a result of this Budget and the pay increase.

Example 7b Single Private sector worker

2018 2019

€ €


Pension Contribution 1,250 1,275





Net income 20,575 20,935

Annual Gain 359

Change as a % of net income 1.75%



USC, €470

PRSI, €1,020 Pension Contribution, €1,275

Fiona- 2019 Gross Earned Income €25,500

Net Earnings

Income Tax

USC

PRSI

Pension Contrib.


Example 8

Noel is a part-time worker working 30 hours a week on the minimum wage in an office. Noel will see a gain of €382 in his annual net income due to this Budget and the 2019 increase in the National Minimum Wage. Noel will also now qualify for a GP visit card due to the €25 increase in the weekly income limit.

Example 8 Single, part-time minimum wage worker

2018 2019

€ €


Minimum Wage increase 390


Income tax liability 0 0

PRSI liability 0 0


Total tax liability 118 126

Net Income 14,780 15,152

Annual Gain 382



USC, €126

Noel - Gross Income €15,288

Net Earnings

USC


Example 9

Colm is a self-employed painter earning €30,000. He has one child Emma who is 1 year old and who is enrolled in Tusla-registered childcare for 52 weeks of the year. He will see a gain of €1,280 in his annual net income due to this Budget.

Example 1 Single, self-employed worker

2018 2019

€ €


Income tax liability

1,550 1,350




Child Benefit 1,680 1,680

Childcare Subsidy (52 weeks) - 1,040 Net Income

28,218

29,498

Annual Gain Change as a % of Net Income

1,280

4.5%



USC, €673

PRSI, €1,200

Child Benefit, €1,680

Childcare Subsidy, €1,040

Colm- 2019 Gross Earned Income €30,000

Net Earnings

Income Tax

USC

PRSI

Child Benefit

Childcare Subsidy

Tithe an Rialtais, Sráid Mhuirfean Uacht, Baile Átha Cliath 2, D02 R583, ÉireGovernment Buildings, Upper Merrion Street,Dublin 2, D02 R583, Ireland

T: +353 1 676 [email protected]