# Case study: Calculating your income tax

### Case studies on how to calculate your tax in 2018

These examples show the different factors involved in calculating your tax in 2018.

## Tax credits

Joan is single and earns €28,000 a year. She receives her notice of determination of tax credits and standard rate cut-off point from Revenue.

Joan’s tax credits are listed on the notice as:
Single Person Tax Credit = €1,650
Employee (PAYE) Tax Credit = €1,650
Tax credit total = €3,300

The standard rate cut-off point for a single person is €34,550. Because Joan’s income is below the cut-off point, all of her income is taxed at the standard rate, (20%), to give her gross tax.
28,000 x 20% = €5,600 gross tax.

All her tax credits are deducted from the gross tax to give the tax that is payable:
€5,600 - €3,300 = €2,300

Joan is also liable to pay the Universal Social Charge (USC). Find out more about the Universal Social Charge.

USC = €617.09

The total amount deducted from her income is:

€2,300 (income tax) + €617.09 (USC) = €2,917.09

You can get the monthly or weekly amount of the total tax that should be deducted from wages by dividing this annual figure by 12 or by 52 respectively.

## Tax rates and the standard rate cut-off point

A single taxpayer who earns €40,000 a year will have their tax calculated as follows:

The standard rate band for a single taxpayer is €34,550.
This means that the first €34,550 is taxed at the standard rate of tax, 20%, and the remainder (€5,450) is taxed at the higher rate of tax, 40%.
€34,550 x 20% = €6,910
€5,450 x 40% = €2,180
Total = €9,090

Tax credits are deducted from this amount to give the tax due. A single PAYE (Pay As You Earn) taxpayer is entitled to
Single Person Tax Credit = €1,650
Employee (PAYE) Tax Credit = €1,650
Total = €3,300

In this example, the taxpayer is not entitled to any other tax credits so the total tax due is:
Gross tax of €9,090

Minus tax credits of €3,300
Tax due = €5,790

The USC on gross income is also payable. The total amount deducted from income in the year is:

€5,790 (income tax) + €1,187.09 (USC) = €6,977.09

## Tax allowances

See the section on tax allowances in How your income tax is calculated for a simple explanation of how to calculate the value of a tax allowance.

Page edited: 3 January 2018