Income levy

Introduction

The Universal Social Charge (USC) has replaced the income levy from 1 January 2011

A new Universal Social Charge was announced in Budget 2011 that 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).

The income levy was calculated separately from income tax. It was charged on your gross income, before deductions, for example, capital allowances or contributions to pensions. You could not 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 could not be used to reduce your liability to the levy.

If you were a PAYE taxpayer your employer was responsible for deducting the levy from your wages. You got an End of year - Income levy Certificate (pdf) if you were in employment.

When you left a job you should have got an Income Levy Certificate (pdf) from your employer. This certificate is for your own records.

Rules

The income levy was payable on gross income from most sources before any tax reliefs, capital allowances, losses, pension contributions or PRSI.

You had to pay the income levy if:

  • You were under 65 and your gross income was above €15,028 per year or €289 per week

Or

  • You were aged 65 or over and your annual gross income was more than €20,000 for a single person or €40,000 for a married couple.

You did not pay the income levy if you:

  • Were under 65 with an annual gross income not more than a specified limit
  • Were 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
  • Had a full medical card. The exemption was due as long as you held a full medical card for some period during the year.

Income not taken into account:

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 were made by your employer weekly or monthly, depending on how you were paid. Income levy deductions are not cumulative.

From 1 January 2010

Income levy rates were 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 was greater than the minimum threshold of €15,028 per year or €289 per week, you paid the levy on the full amount of your income. (If you were aged 65 or over the minimum threshold was €20,000 per year for a single person and €40,000 per year for a couple).

Married couples (under 65)

The income thresholds applied to each spouse individually and cannot be combined if one spouse is below the threshold and the other above. For example, if you earned €14,000 per year and your spouse earned €20,000 per year, you were not liable to pay the income levy but your spouse was.

PAYE taxpayers (under 65)

Your employer calculated the income levy on a week by week or month by month basis. If your income varied from week to week you could pay the income levy at a higher rate than you were actually liable to pay but in such a case you should get a refund.

Example 1

Your yearly income is less than €15,028. However, in July 2010 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.

Page edited: 25 November 2014