Universal Social Charge (USC)
The Universal Social Charge (USC) is a tax on income.
You pay the USC if your gross income is more than €13,000 per year. Once your income is over this limit, you pay the relevant rate of USC on all of your income. It is calculated on a weekly or monthly basis.
It does not apply to social welfare or similar payments, and there are certain other exceptions: see 'Income exempt from the USC' below.
Budget 2024 - Universal Social Charge
On 10 October 2023, it was announced that the ceiling for the 2% Universal Social Charge (USC) band will increase by €2,840 from €22,920 to €25,760 from 1 January 2024. The 4.5% USC rate that currently applies to income between €22,920 and €70,044 will be reduced to 4% from 1 January 2024. The 4% rate will apply to income between €25,760 and €70,044.
Income liable for the USC
The Universal Social Charge is a tax you pay on gross income, including notional pay (notional pay is a non-cash benefit, such as benefit-in-kind), after any relief for certain capital allowances. The USC is payable on pension contributions.
If your total income is €13,000 or less per year, you do not pay any USC. If it is more than €13,000 per year, you pay USC on your full income.
For married couples or civil partners, each spouse or civil partner is treated individually by their employer or pension provider throughout the year.
Liability for the USC depends on the date of the payment rather than when the income was earned.
Although you may not have to pay income tax based on your entitlement to tax credits or by use of losses or capital allowances, you may still have to pay the Universal Social Charge on your income.
Some sources of income are exempt from income tax but are liable to the Universal Social Charge. These include income from:
- The occupation of certain woodlands
- Profits from stallion fees
- Stud greyhound services fees and farmland leasing
- Patent royalty income
- Earnings of certain writers, artists and composers
Income exempt from the USC
You do not pay the USC if your total income for a year is €13,000 or less. (If your income is €60,000 or less, there is a reduced rate if you are aged 70 or over or a medical card holder.)
All Department of Social Protection payments, including Maternity Benefit, Paternity Benefit and State pensions, are exempt from the Universal Social Charge. Similar payments, such as payments made as part of Community Employment schemes or the Back to Education Allowance, are exempt. Social welfare or similar payments made from abroad are exempt. Student grants and scholarships are also exempt.
Income where DIRT (Deposit Interest Retention Tax) has already been paid is exempt from the USC.
There are a number of other exemptions. These include:
- Certain salary sacrifice schemes, such as the TaxSaver Commuter Ticket Scheme and the Cycle to Work scheme
- Statutory redundancy payments
- Foster care payments
- Child Benefit
- Rent a Room Relief
You can find more information about USC exemptions on revenue.ie.
Statutory redundancy payments are exempt from the charge. Statutory redundancy payments amount to 2 weeks’ pay per year of service plus a bonus week, subject to a maximum payment of €600 per week. In addition, redundancy payments above the statutory redundancy amount are exempt from the Universal Social Charge, up to certain limits. These limits are up to €10,160 plus €765 per complete year of service in excess of the statutory redundancy. This basic exemption can be further increased by up to €10,000 if the person is not a member of an occupational pension scheme.
The Universal Social Charge is charged on liable income after the statutory exemptions above, and after any additional deduction for Standard Capital Superannuation Benefit (SCSB).
How maintenance payments are treated for Universal Social Charge purposes depends on whether they are voluntary payments or legally enforceable payments.
Voluntary maintenance payments (payments paid under an informal arrangement):
- The spouse making the payments does not receive exemption from the Universal Social Charge on the portion of their income that they pay as maintenance.
- The spouse who receives the payments is not subject to the Universal Social Charge on the maintenance payments they receive.
Legally enforceable maintenance payments (payable under legal obligation):
- The spouse making the payments is entitled to receive an exemption from the Universal Social Charge on the portion of their income on the maintenance that they pay, either directly or indirectly, to their spouse. There is no exemption for any portion of the maintenance payments paid towards the maintenance of children.
- An employee wishing to claim Universal Social Charge exemption for legally enforceable maintenance payments throughout the year may either give the information required to their payroll office, or they can apply to Revenue at the end of the year to claim any refund of Universal Social Charge due.
- The spouse who receives the payments is subject to the Universal Social Charge on the portion of the maintenance payments that they receive in respect of themselves. Any portion of the maintenance payments paid towards the maintenance of children is not subject to the Universal Social Charge.
In the case of a legally enforceable maintenance arrangement, where a separated couple has jointly elected to be treated as a married couple for income tax purposes, the spouse making the payments does not receive exemption from the Universal Social Charge on the portion of their income that they pay as maintenance. The spouse who receives the payments is not subject to the Universal Social Charge on the maintenance payments that they receive.
An employer’s or pension provider’s contribution to an approved retirement benefit scheme is not liable to the Universal Social Charge, but an employee's contributions are. Since 1 January 2016, employer contributions to your Personal Retirement Savings Account (PRSA) are no longer subject to USC. Up to 31 December 2015, these contributions were subject to USC.
Occupational pensions are subject to the Universal Social Charge, but Department of Social Protection pensions or similar pensions from abroad are not. The USC is only payable on lump-sum pension payments on the portion over €500,000.
If your income is €13,000 or less, you pay no Universal Social Charge (USC). Once your income is over this limit, you pay the relevant rate of USC on all of your income. For example, if you have income of €13,000 you will pay no USC. If you have income of €13,001 you will pay 0.5% on income up to €12,012 and 2% on income between €12,012 and €13,001.
|0.5%||Up to €12,012|
|2%||From €12,012.01 to €22,920|
|4.5%||From €22,920.01 to €70,044|
|8%||From €70,044.01 and over|
|11%||Self-employed income over €100,000|
|0.5%||Income up to €12,012|
|2%||All income over €12,012|
Reduced rates of USC apply to:
- People aged 70 or over whose total income for the year is €60,000 or less
- Medical card holders aged under 70 whose total income for the year is €60,000 or less
Total income for USC purposes does not include payments from the Department of Social Protection.
You must hold a full medical card or a Health Amendment Act Card to qualify for the reduced rate. People who hold a GP visit card, a Drugs Payment Scheme Card, a European Health Insurance Card or a Long-term Illness Scheme Card do not qualify for the reduced rate. If a person reaches 70 years at any stage during the year, they will benefit from the maximum 2% rate for the whole year.
If you hold Northern Ireland medical card, you are not treated as holding a full medical card and will not qualify for a reduced rate.
Self-employed income over €100,000
A surcharge of 3% applies to people who have income from self-employment above €100,000, regardless of age.
Note: Bonuses paid to employees of the 5 financial institutions that have received financial support from the State are chargeable to the USC at the rate of 45% on the full amount if the bonus is more than €20,000 in a single tax year.
Examples (2023 rates)
A person who is earning €50,000 per year will pay the Universal Social Charge at a rate of:
- 0.5% on the first €12,012 = €60.06
- 2% on the next €10,908 = €218.16
- 4.5% on the balance of €27,080 = €1,218.60
So, this person will pay a total of €1496.82 in 2023.
You do not pay the Universal Social Charge if your income for a year does not exceed €13,000. For example, a person who is earning €13,000 per year will not pay any Universal Social Charge, while a person who is earning €13,100 per year will pay 0.5% on €12,012 (which amounts to €60.06) and 2% on the remaining €1,088 which amounts to €21.76). This person will pay a total of €81.82 in the year.
A person who has self-employed income of €112,000 per year, will pay the Universal Social Charge at a rate of:
- 0.5% on the first €12,012 = €60.06
- 2% on the next €10,908 = €218.16
- 4.5% on the next €47,124 = €2,120.58
- 8% on the next €29,956 = €2,396.48
- 11% on the next €12,000 = €1,320
- In total this person will pay €6,115.28 in 2023.
Administration of the Universal SocialCharge
Universal Social Charge is deducted on a cumulative basis - similar to the way in which PAYE is deducted. Employers and pension providers are responsible for deducting the Universal Social Charge from their employees’ salaries. They deduct and pay it to Revenue on behalf of employees.
Employer Tax Credit Certificates (P2Cs) show USC rates and cut-off points as well as showing PAYE rates and cut-off points. You should tell Revenue if your circumstances change (for example, if you get a medical card) so your Tax Credit Certificate can be amended.
Details of the Universal Social Charge should be recorded separately on your payslip. The total amount of USC paid should be shown on your Employment Detail Summary, your Preliminary End of Year Statement, and your Statement of Liability each year. You can read more in our document about How to review your tax for PAYE taxpayers.
If you change jobs, your employer will inform Revenue of your leaving date. From 1 January 2019, your employer will no longer issue you with a form P45.
Self-employed people make a payment of USC along with their preliminary tax payment, and any balance will be collected when the final assessment issues.
Refunds of overpayments
For PAYE taxpayers, USC is deducted on a cumulative basis, similar to the way PAYE is deducted. This means that your USC deductions are spread out evenly over the year and the correct amount of USC is deducted at the end of the year. Overpayments of USC should not arise. If, however, at the end of the year you think you have overpaid USC, you can review your USC and tax on PAYE Services. This service is now available through Revenue's myAccount Service. You can also contact your local Revenue office for a review of your USC deductions.
Where to apply
Employers and pension providers are responsible for deducting the Universal Social Charge from their employees’ salaries. They will deduct and pay it to Revenue on behalf of employees. Revenue will notify employers of the USC rates and thresholds to be applied for all employees. Contact Revenue to let Revenue know of any changes in your circumstances (for example, if you get a medical card).