Grossed Up State Savings Rates - Comparable Tax Rate

I'm trying to work out the updated grossed up comparable State Savings rates in light of the DIRT changes.

The DIRT rate is currently 41%.
The DIRT rate for 2017 will be 39%.
The DIRT rate for 2018 has been pre-announced at 37%.
The DIRT rate for 2019 has been pre-announced at 35%.
The DIRT rate for 2020 has been pre-announced at 33%.
(A small number of people pay PRSI on top of DIRT if they have unearned income of 5K+ per year).

What is the correct tax rate to calculate grossed up State Savings rates against? i.e. What would a normal deposit account need to be paying to match State Savings rates?

Most normal term deposit accounts pay interest on maturity date.

Hence, would I would think that:
The 3 year rate should be compared to a tax rate of 35%. Meaning a grossed up rate of aprox. 0.51%.
The 4 year rate should be compared to a tax rate of 33%. Meaning a grossed up rate of aprox. 0.75%.
The 5 year rate should be compared to a tax rate of 33%. Meaning a grossed up rate of aprox. 1.46%.
The 10 year rate should be compared to a tax rate of 33%. Meaning a grossed up rate of aprox. 2.24%.

Any thoughts on the above approach?
 

Sarenco

Frequent Poster
Hi Ciaran

I think that looks like a sensible approach.

However, I think it would be helpful if you could continue to also give a grossed up rate that is inclusive of PRSI - I wouldn't be so sure that it's only a small number of people that have to pay PRSI on top of DIRT.
 

Sarenco

Frequent Poster
Hi Ciaran

The anticipated DIRT change for 2018 doesn't appear to have materialised today, which I guess mucks up your grossed up rates for State Savings products in the "Best Buys" section.

Maybe it makes sense to wait to see if the pre-announced change makes it into the Finance Bill?
 
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