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.
Table 1: Effective Tax Rates following Budgets 2014, 2023 and 2024 | |||||||||
Income Level | Single Person | Couple 1 Earner | Couple 2 Earners | ||||||
| 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