How Will USC Reductions Affect Your Pay?

/ 11th October 2016 /

As widely flagged, finance minister Michael Noonan has reduced the lower USC rates – but not the higher 8% rate – in Budget 2017.

The minister said that the adjustments will give back €335 million to the take home pay of low and middle income earners.

• The 1.0% rate will go down to 0.5%
• The 3.0% rate will go down to 2.5%
• The 5.5% rate will go down to 5.0%.

Noonan has also increased the ceiling of the band on which the reduced new 2.5% rate of USC will be payable, from €18,668 to €18,772. “This increase will ensure that the salary of a full-time worker on the minimum wage will remain outside the top rates of USC,” he said.

The minister added: “Though relatively small these changes will have a material impact on the disposable income of lower and middle income earners. More importantly it signals this government’s intent to phase out the USC over time as resources permit.”

Though Noonan did nothing to alleviate the 3% USC surcharge for self-employed people earning over €100,000, he increased the earned income credit from €550 to €950. This is viewed as another small step towards equalising treatment with PAYE workers, though a disparity in treatment still remains.