Income Tax on extra pay

[Sean Og]

I recently got paid for some extra work i did during the summer for the Dept Of Education. I am a teacher and get my normal pay every 2 weeks. I am married and tax credits shared with my wife who also works. In my pay slip for this extra work i lost 40% on P.A.Y.E. , 8% on USC and 4% on Employees PRSI so overall i lost 52% of what i earned. This is far more than what i pay in my normal wages every 2 weeks. Any advice or will it all just work itself out when i request a P21 balancing statement in early 2019?

 

[jpd]

That sounds about right - presumably your marginal tax rate is 40% plus PRSI & USC on top. What were you expecting to happen?

 

[Monbretia]

Your tax credits for the year are divided out and allocated to be used up by your regular pay every pay period, this extra pay then doesn't have any tax credits to offset the tax so you pay the full whack on all of it. Similar to doing overtime for most people.

 

[Protocol]

This is normal.

When you get an increment, the same thing happens.

You must differentiate between the marginal tax rate and the effective tax rate.

Marginal tax rates of 48-50% apply in Ireland for income over 36k approx.

However, the 8% USC seems too high.