Effective Income Tax Rates after Budget 2024
Central to a thorough understanding of income taxation in Ireland are effective tax rates. These rates are calculated by comparing the total amount of income tax a person pays with their pre-tax income. For example, a person earning €50,000 who pays €10,000 in tax (after all credits and allowances) will have an effective tax rate of 20%. Calculating income taxation in this way provides a more accurate reflection of the scale of income taxation faced by earners.
Following Budget 2024 we have calculated effective tax rates for a single person, a single income couple and a couple with two earners. Table 1 presents the results of this analysis. For comparative purposes, the effective tax rates which existed for people with the same income last year and 10 years ago are presented.
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Table 1: Effective Tax Rates following Budgets 2014, 2023 and 2024 |
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Income Level |
Single Person |
Couple 1 Earner |
Couple 2 Earners |
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|
2014 |
2023 |
2024 |
2014 |
2023 |
2024 |
2014 |
2023 |
2024 |
|
€15,000 |
2.7% |
0.8% |
0.8% |
2.7% |
0.8% |
0.8% |
2.0% |
0.0% |
0.0% |
|
€20,000 |
11.1% |
5.6% |
4.6% |
7.6% |
3.4% |
3.4% |
2.3% |
0.0% |
0.0% |
|
€25,000 |
15.1% |
11.3% |
10.3% |
8.3% |
5.5% |
5.3% |
2.5% |
0.6% |
0.6% |
|
€30,000 |
17.7% |
14.2% |
13.2% |
9.5% |
6.0% |
5.7% |
5.6% |
1.9% |
1.9% |
|
€40,000 |
24.8% |
17.7% |
16.9% |
14.9% |
9.1% |
7.7% |
9.9% |
6.1% |
5.0% |
|
€60,000 |
33.9% |
28.0% |
26.6% |
26.6% |
19.2% |
17.5% |
17.7% |
13.9% |
13.1% |
|
€100,000 |
41.1% |
37.2% |
36.4% |
36.8% |
32.0% |
30.9% |
30.2% |
23.9% |
22.3% |
|
€120,000 |
42.9% |
39.7% |
39.0% |
39.3% |
35.3% |
34.4% |
33.8% |
28.2% |
26.9% |
Notes: Total of income tax (including USC), levies and PRSI as a % total income. Couples assume: 65%/35% income division. PAYE earners.
The measures adopted in Budget 2024 provide another notable reduction in income taxation; building on large reductions in 2023. In 2024, for a single person with an income of €25,000 the effective tax rate will be 10.3%, rising to 16.9% for an income of €40,000 and 39.0% for an income of €120,000. A single income couple will have an effective tax rate of 7.7% at an income of €40,000, rising to 17.5% for an income of €60,000 and 34.4% for an income of €120,000. In the case of a couple where both are earning and their combined income is €60,000 their effective tax rate is 13.1%, rising to 26.9% for combined earnings of €120,000. As Chart 2 shows these effective tax rates have decreased considerably over the past two and a half decades for all earners.
Chart 2: Effective Income Tax Rates in Ireland, 1997-2024
Notes: Total of income tax (including USC), levies and PRSI as a % total income. Couples assume a 65%/35% income division. PAYE earners. 2009* refers to a supplementary Budget in that year.
Our full analysis of Budget 2024 is available now: Budget 2024 Analysis and Critique | Social Justice Ireland