The 2011 Budget on Dec 7th announced that the Health Levy and Income Levy are both to be abolished and replaced by a new Universal Social Charge from Jan 1st 2011 . The new USC deductions will be applied to all income paid from Jan 1st 2011 This USC is a tax and does not provide a benefit to those paying the charge.
All individuals are liable to pay the USC if their gross annual income is more than €4004 (€77 a week).
The rates for this USC will be as follows:
Zero if total income is under €4,004
For people with income of €4005 or more the rates are :
2% on all income from 0 up to €10,036
4% on earnings between €10,037 and €16,016
7% on any income over €16,016
People aged over 70 and or more will have a maximum rate of 4% USC (Even on Income over €16,016 )
So someone earning €25,000 will be charged 2% on the first €10036, then 4% on the next €5980 and 7% on the rest. Making a total of €1069 a year
For PAYE workers : The Universal Social Charge will be deducted from wages. Where the USC has been applied for particular pay period(s) throughout the year but at year end you are ultimately not liable or are liable for a lower rate you will be due a refund of some or all of any Universal Social Charge paid.
Refunds : Where you have been in continuous employment with an employer throughout the year in question (i.e., from 1 January to 31 December), your employer should refund any overpayment of Universal Social Charge deducted at the end of the year. (Check that they do). Where you have not been in continuous employment with a single employer throughout the year Revenue will deal with any refund.
The Health Levy was charged at 4% on all earnings above €26000 up to €75,036 and 5% on earnings over €75,036.
The Income Levy was set at 2% on income up to €75,036, 4% on income from €75,037 to €174,980 and 6% on income above €174,980.
For more information visit www.citizensinformation.ie