Income levy
Introduction
A levy is a tax on your income. However, the income levy is calculated separately from income tax. It is charged on your gross income, before deductions, for example, capital allowances or contributions to pensions.
You cannot claim deductions or credits to reduce the amount of levy you must pay. The levy is collected from your gross income. Similarly, excess or unused tax credits cannot be used to reduce your liability to the levy.
If you are a PAYE taxpayer your employer is responsible for deducting the levy from your wages. You will get an End of year - Income levy Certificate (pdf) if you are in employment.
When you leave a job you should get an Income Levy Certificate (pdf) from your employer. This certificate is for your own records.
Note: the Universal Social Charge (USC) has replaced the income levy from 1 January 2011
Note: A new Universal Social Charge was announced in Budget 2011 that has replaced both the income levy and the health levy from 1 January 2011.
Medical card holders who were previously exempt from the income levy may have to pay the USC.
You can find out more about the Universal Social Charge in Revenue's Frequently Asked Questions document (pdf).
Rules
The income levy is payable on gross income from most sources before any tax reliefs, capital allowances, losses, pension contributions or PRSI.
You must pay the income levy if:
- You are under 65 and your gross income is above €15,028 per year or €289 per week
Or
- You are aged 65 or over and your annual gross income is more than €20,000 for a single person or €40,000 for a married couple.
You do not pay the income levy if you:
- Are under 65 with an annual gross income not more than a specified limit
- Are aged 65 or over with an annual gross income not more than €20,000 for a single individual or €40,000 for a married couple
- Have a full medical card. The exemption is due as long as you held a full medical card for some period during the year.
Income not taken into account:
- Social welfare payments including those from abroad
- Health Service Executive payments including Foster Care Allowance
- Community Employment Scheme and Job Initiative payments
- Back to Education Allowance
- Income subjected to DIRT.
Other sources of income may not be taken into account, for example, payments for personal injuries, Hepatitis C and Thalidomide. For a full list of income not taken into account see Revenue’s guidance notes on the income levy (pdf).
Redundancy payments are exempt to the same extent as they are for income tax. More information can be found on Revenue’s website.
Rates
Deductions are made by your employer weekly or monthly, depending on how you are paid. Income levy deductions are not cumulative.
From 1 January 2010
Income levy rates are as follows:
- 2% on income up to €75,036
- 4% on income from €75,037 to €174,980
- 6% on income above €174,980.
If your income is greater than the minimum threshold of €15,028 per year or €289 per week, you pay the levy on the full amount of your income. (If you are aged 65 or over the minimum threshold is €20,000 per year for a single person and €40,000 per year for a couple).
Married couples (under 65)
The income thresholds apply to each spouse individually and cannot be combined if one spouse is below the threshold and the other above. For example, if you earn €14,000 per year and your spouse earns €20,000 per year, you will not pay the income levy but your spouse will.
PAYE taxpayers (under 65)
Your employer calculates the income levy on a week by week or month by month basis. If your income varies from week to week you could pay the income levy at a higher rate than you are actually liable to pay but in such a case you will get a refund.
| Example 1 |
Your yearly income is less than €15,028. However, in July you get a bonus which means your income goes over the weekly minimum threshold of €289. The result is your full income that week is subject to the income levy. At the end of the year, if your annual income is not more than €15,028 then you do not have to pay the income levy. In this situation your employer should make an adjustment at the end of the year (week 52) and refund all income levy deducted from your wages. If you have not worked with the same employer continuously throughout the year Revenue will deal with any refund of income levy due at the end of the year. |
| Example 2 |
The income levy is calculated on a weekly threshold of 2% for income up to €1,443, 4% from €1,443 to €3,365, and 6% on the balance. If you get a payment for one week in excess of €3,365 you will pay the income levy at the 6% on the balance. If your yearly income means you are liable at a lower rate, you will have overpaid the income levy. In this situation your employer should make an adjustment at the end of the year (week 52) and make the appropriate refund. If you have not worked with the same employer continuously throughout the year Revenue will deal with any refund of income levy due at the end of the year. |
How to apply
If you have over paid the income levy your employer should make an adjustment at the end of the year (week 52) and make the appropriate refund.
If you have not worked with the same employer continuously throughout the year you should fill in an Income Levy Claim Form (pdf) and send it to your local Revenue office - see 'Where to apply' below.
Where to apply
For further information on the income levy or to get a refund contact your local Revenue office.
Use the Revenue contact locator to find the Lo-call number for your region.
You can find more detailed Revenue contact details for your region.
Related Documents
- Universal Social Charge (USC)
The Universal Social Charge is a tax payable on gross income that came into effect on 1 January 2011. - Case study: Calculating your income tax
Tax on income you earn from employment is deducted directly from your salary (pay). A case study on how this tax is calculated. - Budget 2011
Budget 2011 was announced on 7 December 2010. Summary of the main changes.
Contact Us
If you have a question relating to this topic you can contact the Citizens Information Phone Service on 0761 07 4000 (Monday to Friday, 9am to 9pm) or you can visit your local Citizens Information Centre.