Budget 2022 – The Payroll Perspective
With Budget 2022 now complete our Payroll experts analyses the key takeaways and how will they affect your employee’s net pay.
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
|Standard Rate Cut off Point||2021||2022|
|Single / Widowed Person or Surviving Civil Partner without qualifying children||€35,300||€36,800|
|Person qualifying for the Single Person Child Carer Tax Credit||€39,300||€40,800|
|Married Couple or Civil Partnership – One Income||€44,300||€45,800|
|Married Couple or Civil Partnership – Two Income||€44,300 & €26,300*||€45,800 & €27,800*|
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.
|Minimum Wage Employee*||2022||2021|
|Annual disposable income||€18,993.93||€18,558.53|
|Monthly disposable income||€1,582.83||€1,546.54|
|Weekly disposable income||€365.27||€356.89|
Most single workers will also benefit, as demonstrated in our 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.
|Single person with annual salary of €38,000*||2022||2021|
|Annual disposable income||€31,042.56||€30,627.36|
|Monthly disposable income||€2,586.88||€2,552.28|
|Weekly disposable income||€596.97||€588.99|
Lastly our married couple is also significantly better off making out with more than €830 extra disposable income per annum.
|Married couple with 1 salary of
€45,000 & €30,000*
|Annual income||€ 75,000.00||€ 75,000.00|
|Tax due||€ 8,480.00||€ 9,280.00|
|PRSI||€ 3,000.00||€ 3,000.00|
|USC||€ 1,949.89||€ 1,980.29|
|Total deductions||€ 13,429.89||€ 14,260.29|
|Annual disposable income||€ 61,570.11||€ 60,739.71|
|Monthly disposable income||€ 5,130.84||€ 5,061.64|
|Weekly disposable income||€ 1,184.04||€ 1,168.07|
*Due to the complexity of tax and PRSI regulations, results are based on a number of tax assumptions
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