THE introduction of the Universal Social Charge (USC) from this month will see wages and salaries reduced.
The new USC is basically an amalgamation and re-arrangement of the health and income levies that were introduced and then increased in the last two to three years.
Anyone earning over €4,004 will now pay 2% USC, while those on incomes over a meagre €16,016 will be hit with 7%.
A 4% charge will come into effect on incomes from €10,037 to €16,016.

Lower paid will lose
The USC is likely to disproportionately impact those on lower salary levels.
For example, those currently on a €16,500 salary last year were liable to levies of just €330, whereas under the USC system this increases to €474 – they are €144 worse off.  Up to the end of December, you had to earn over €16,000 before you paid the 2% health levy.
The rates and thresholds are as follows:

2% on the first €10,036;

4% on the next €5,980;

7% on the rest.

Some high earners will be better off
The new charge will see anybody earning over €16,016 paying a rate of 7% on their income.
In the previous system, high earners would have paid a health levy of 4% on income up to €75,036 and 5% health levy on the remainder.
However, with the new USC a single worker earning €150,000, for example, they will pay €1,432 less following the introduction of the universal social charge than they did paying the health and income levies.
This is the 7pc USC has replaced a combined 11% health levy and income levy for the highest earners. Some tax experts have calculated that this will mean a self-employed person earning €1m a year will be around €35,000 better off a year.

Middle Ireland will be bashed
Also set to feel the impact are people on salaries of €80,000 to €90,000.
Although these might seem like high income levels for those earning much less, high costs in this country mean that people in these income brackets are not exactly swimming in cash.
Taxpayers in this income bracket will have been hit by the reduction in tax credits (the amount of income you can earn tax free), the lowering of the tax bands (which means paying more tax at the higher 41pc rate) and the removal on the ceiling on paying PRSI.
According to Department of Finance figures, a single PAYE worker paying into a pension and earning €75,000 a year will be €1,545 worse off a year. This works out at around €129 a year. The USC alone will leave them €250 worse off a year.
If this person was earning €100,000, the hit to annual income will be almost €2,000, with An additional €130 a year going on the USC.