The Universal Social Charge (USC) and its continued existence have been in the news recently given that numerous political parties promised to get rid of it.
Years later, it's still around but certain groups of people are exempt from paying the tax.
The USC is a tax on income that replaced two previous levies - the income levy and the health levy since January 1, 2011.
For those earning above a certain annual amount, you will pay the relevant rate of USC on that income and it is calculated on a weekly or monthly basis.
However, there are groups of people that do not have to pay the USC.
If you are earning €13,000 or less per annum, you do not pay any Universal Social Charge.
A number of social welfare payments are also exempt from the USC.
The exempt payments include Maternity Benefit, Paternity Benefit and State pensions.
Similar welfare payments such as payments that are part of community employment schemes or the back to school allowance are both exempt from the USC.
Other exemptions 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
If you earn more than €13,000, the rate of USC will depend on your income.
The standard rate for USC in 2022 is:
Rate/Income band
- 0.5% up to €12,012
- 2% from €12,012.01 to €21,295
- 4.5% from €21,295.01 to €70,044
- 8% from €70,044.01 and over
- 11% self-employed income over €100,000
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