What Budget 2022 means for HR

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What Budget 2022 means for HR

With Budget 2022 now complete Paycheck Plus’ payroll experts analyse the key takeaways and how will they affect employee’s net pay.

From a payroll perspective the headline measures include increases to: the minimum wage, income tax rate bands and the personal tax credits.

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 employees’ net pay?

To illustrate how these changes will impact 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 income  €20,475.00  €19,890.00
Tax due  €695.00  €678.00
PRSI  €556.75  €435.85
USC  €229.32  €217.62
Total deductions  €1,481.07  €1,331.47
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

 

Single Worker

Most single workers will also benefit, as demonstrated in this 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 income €38,000.00 €38,000.00
Tax due €4,440.00 €4,840.00
PRSI €1,520.00 €1,520.00
USC €997.45 €1,012.65
Total deductions €6,957.45 €7,372.65
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

 

Married Couple

Married couples  are also significantly better off making. In this case the couple makes out with more than €830 extra disposable income per annum.

Married couple with 1 salary of
€45,000 & €30,000*
2022 2021
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

For more information on payroll and Budget 2022 visit paycheckplus.ie

Paycheck Plus is a multi award-winning Irish payroll bureau serving businesses across Ireland and the UK with comprehensive, ISO and ISAE 3402 accreditedpayroll outsourcing services.