THE income squeeze has left half of households with less than €35,000 a year to live on. This is what some 850,000 households have after paying income tax, PRSI and the universal social charge (USC).
Out of this €35,000 net income, they still have to pay mortgages or rent, as well as cover energy bills, property tax, food and the other costs of running a home.
The research was done by the trade union-backed Nevin Economic and Social Institute (NERI) and looked at households of all sizes including families and single people. The findings are set to increase pressure for tax cuts for lower- and middle-income earners.
NERI researcher Micheal Collins concluded in the report: "Fifty per cent of households have a disposable income of less than €35,000 per annum."
He explained that disposable income was made up of wages, pensions and included any social welfare payments, such as child benefit. To get to disposable income you then subtract income tax and other charges, such as the USC.
The €35,000 figure is then what is left for half of all households to meet day-to-day bills. Dr Collins calculated that just over a third of households – or around 578,000 – have a disposable income of even less, at €26,000 a year.
But the top 3pc of households, 51,000, have a disposable income of more than €100,000, the economist has calculated, using Central Statistics Office data. He said the average household's income had crashed by 15pc since 2008.
Households have been hit heavily by pay cuts and job losses, while a raft of new taxes and charges have shrunk income.
Electricity has gone up by 25pc in the past three years, health insurance has doubled in price since the downturn and third-level college costs have shot up by 60pc since 2007. The property tax has been introduced and the top rate of VAT is now 23pc.
A report by state policy advisory body Forfas found that Ireland was the third most expensive of 18 EU countries.
Budget changes mean that workers in this country pay the high rate of income tax on far more of their income than in other countries.
People start to pay the higher rate on incomes of just €32,800, which is far lower than in other EU countries, Finance Minister Michael Noonan said in the past few days.
Tax experts have calculated that in France a worker can earn €186,749 before hitting the higher rate. In Britain, the top income tax rate does not kick in until salaries go over €183,235, according to the Irish Tax Institute.
In the US, the highest income tax rate does not apply until earnings are greater than €300,000.
Yesterday, the employers' body IBEC called on the Government to reduce income tax at the next Budget.
Chief executive Danny McCoy said: "Hard-working families need a break. At 52pc, we now have one of the highest marginal tax rates in the OECD, well above the average of 36pc. It also kicks in at a low income level."
He said the "unfair pensions levy" should also be dropped and excessive excise increases, which are way out of line internationally, should be reversed.
Last week, Mr Noonan pledged to widen income tax bands as soon as the State can afford it.