Explained: How the USC is set to change - and what that means for you
Today's Budget includes changes to the controversial Universal Social Charge.
The income tax, introduced in December 2010 at the height of the crisis, as a revenue raising measure has been cherry-picked for reform by Fine Gael as the economy continues to look toward recovery.
USC represents revenue of around €4 billion per annum for the State.
As it stands you pay the USC if your gross income is more than €13,000 per year. Once your income is over this limit, you pay the relevant rate of USC on all of your income.
The standard rates prior to Budget 2018 are:
- 2.5pc From €12,012.01 to €18,772
- 5pc From €18,772.01 to €70,044
- 8pc From €70,044.01 to €100,000
- 8pc Any PAYE income over €100,000
- 11pc Self-employed income over €100,000
However, measures announced today will mean that the lower rates are being marginally reduced as follows:
The 2.5pc USC rate is being reduced to 2pc and the 5pc USC rate is being dropped to 4.75pc.
For workers on minimum wage the ceiling for the new 2pc rate is being raised from €18,772 to €19,372 to ensure that full-time workers on the new increased national minimum wage of €9.55-an-hour won't pay the upper rates of USC.