What will be your take home pay in 2024? We are all budgeted out at this stage. I had enough after getting my 5th of 9 budget briefings. When deciding on a blog topic I asked myself what interests people the most. For me, it’s the amount of extra cash in my pocket. To pay for the higher costs of living!
The focus of this will be to show the extra you get in different scenarios and the reasons for the difference. We’ll look at
- A single person
- Married couple with one income
- Married couple with two incomes
- Other pay issues
- Recommendations
A Single Person
Noel Troy is single, living in Dublin and renting accommodation. His salary is €50,000 per annum and works as a Garda. Noel is a good man for the news. His nickname at work is Noel’s news. Noel’s net take home pay for 2023 and 2024 is
| 2023 | 2024 | |
| First €40,000/€42,000 x 20% | €8,000 | €8,400 |
| Balance €10,000/€8,000 x 40% | €4,000 | €3,200 |
| Total | €12,000 | €11,600 |
| Less Personal Credit | €1,775 | €1,875 |
| Less PAYE Credit | €1,775 | €1,875 |
| Less Rent Credit | €500 | €750 |
| PAYE total | €7,950 | €7,100 |
| USC | €1,497 | €1,305 |
| PRSI | €2,000 | €2,000 |
| Net take home pay | €38,553 | €39,595 |
| Monthly net | €3,213 | €3,300 |
As you’ll see Noel is better off by just under €87 per month or €1,042 over the year. The savings arise from
| Extra €2,000 at 20% | €400 |
| Extra tax credits | €450 |
| USC saving | €192 |
| Total | €1,042 |
If Noel was self-employed the tax savings would be the same. Instead of the PAYE credit a self-employed person gets the Earned Income Credit. That has also increased by €100. The result is good news for Noel.
For employees or self-employed earning €40,000 or less, they won’t get the benefit of the extra lower rate band. But they will still save with the increase in the tax credits and reduced USC.
Planning Tip
Let’s assume you are a company director earning a salary to maximise the lower rate band. Increase your salary from €40,000 to €42,000 in 2024. All we will be at the lower tax rate. Plus, you get a corporation tax deduction of 12.5% or 20% for a professional services company.
Married Couple one Income
Mary Wardman is a college lecturer working in SETU. Her husband Bill is a stay-at-home dad and looks after their 5 children. Mary earns €85,000 per annum. They own a bit of their own home. The bank owns the other bit.
| 2023 | 2024 | |
| First €49,000/€51,000 x 20% | €9,800 | €10,200 |
| Balance €36,00/€34,000 x 20% | €14,400 | €13,600 |
| Total | €24,200 | €23,800 |
| Less Married Credit | €3,550 | €3,750 |
| Less PAYE Credit | €1,775 | €1,875 |
| Home carer credit | €1,700 | €1,800 |
| PAYE total | €17,175 | €16,375 |
| USC | €3,595 | €3,303 |
| PRSI | €3,400 | €3,400 |
| Net take home pay | €60,830 | €61,922 |
| Net monthly | €5,069 | €5,160 |
Other issues could be at play for the Wardmans to reduce their tax liability further. If they are paying rent for a child in college the rent credit will increase from €500 to €750.
Mortgage Interest Relief
The balance on their mortgage at the end of 2022 was €200,000. That year they paid €6,000 in interest. They are on a variable rate and the interest paid in 2023 increased to €10,000. As a once-off measure, the relief is 20% of the increase from 2022 to 2023.
The increase for the Wardmans is €4,000. Tax relief at 20% is €800. There is a cap on this relief at €1,250 per property. It applies to homeowners who have a mortgage balance between €80,000 and €500,000 on the 31st of December 2022.
Planning Tip
The planning tip for the Wardmans is to ensure they get all the tax credits they should. Per the Minister, there is about €180 million in taxes sitting out there unclaimed. And they are launching a campaign to make people aware of this. Good record keeping and knowing your entitlements will help you minimise your taxes.
Married Couple Two Incomes
Trevor and Jenny O’Neill are married with two children in primary school. He’s a guard and she’s a teacher. His salary is €60,000 and hers is €50,000. They have their own home, and the mortgage balance was €250,000 at the end of 2022. The interest went from €7,000 in 2022 to €12,000 in 2023.
| 2023 | 2024 | |
| First €80,000/€84,000 x 20% | €16,000 | €16,800 |
| Balance €30,000/€26,000 x 40% | €12,000 | €10,400 |
| Total | €28,000 | €27,200 |
| Less Married Credit | €3,550 | €3,750 |
| Less PAYE Credit x 2 | €3,550 | €3,750 |
| Mortgage Interest relief | €0 | €1,000 |
| PAYE Total | €20,900 | €18,700 |
| USC | €3,444 | €3,009 |
| PRSI | €4,400 | €4,400 |
| Net take home pay | €81,256 | €83,891 |
| Monthly net | €6,771 | €6,991 |
You’ll see that the O’Neill’s net take home pay increases by €2,635 or €220 per month. It’s uncertain how those entitled to the mortgage interest relief will get this. Most likely through their tax credit but we’ll find out more at the end of the year. When Michael D is signing papers on Christmas day!
Planning Tip
There are many husband-and-wife companies out there that set their own salaries. In 2023 the most the higher income earner can earn at the lower rate is €49,000. For 2024 that goes up by €2,000 to €51,000. In 2023 the most the lower income earning spouse can get at the lower rate is €31,000. For 2024 that increases by €2,000 to €33,000. You’ll see the combined lower rate for 2023 is €80,000 and in 2024 is €84,000.
As such, there’s scope to pay yourself €4,000 more at the 20% rate and the company will get a deduction at 12.5% or 20%.
Other Pay Issues
The minimum wage increases to €12.70 per hour from 1 January 2024.
The Incapacitated Child credit goes up by €200 from €3,300 in 2023 to €3,500 in 2024.
Single Parents
The Single Parent child carer credit increases by €100 from €1,650 to €1,750. Plus, the 20% lower rate band increases by €2,000 from €44,000 to €46,000. This is great news for single parents in employment or self-employment with an income of €46,000 or more. They also get the Single Persons credit and the PAYE or Earned Income credit.
It results in a saving of €700, €400 from the lower rate band increase and €300 in extra tax credits. As I always say, better than a slap in the face with a wet fish.
BIK Company Car
A once-off temporary measure of a €10,000 reduction from the original market value [OMV] of a car or van came in in 2023. This applies to vehicles in categories A to D. The €10,000 reduction remains for 2024. And great news for company car electric vehicle drivers. The €35,000 deduction from the OMV was due to fall to €20,000 in 2024 and €10,000 in 2025. That €35,000 deduction will remain in place until the end of 2025.
So, for an electric car with a €60,000 OMV, the reduction in 2024 will be €45,000 and in 2025 it will be €35,000. As a result, the BIK will be at a percentage of €15,000 in 2024 and a percentage of €25,000 in 2025.
Recommendations
Our main recommendations would be to
- Review your tax credit cert for 2024 when you get that in December. Ensure you get all the credits you are due, and the split of the lower rate bands is right for married couples.
- Company directors can plan their salaries before 2024. Can you maximise your lower rate band?
- There is more certainty about the BIK on electric cars until the end of 2025. It could be worth looking at.
- Keep good records. Like getting the landlord’s details when paying rent for you or a child in college. Keep mortgage interest statements when you get them. You can see the loan balance at the end of 2022 and the interest paid in 2022 and 2023. The banks usually send them after the end of each year.
- Register for MyAccount so you can claim anything that Revenue owe you. Remember you can only go back 4 years. So, at the start of 2024 you can only go back to 2020. If you are due money for 2019, go get it now.
- If you are not sure get help. Pay a tax advisor for a consultation to see if you are due money and to understand your taxes better.
- Finally, if you managed to read all this, give yourself a good solid clap on the back. You are resilient. Plus, a glutton for punishment! Buy yourself something nice with the extra take home pay.
Good tax planning is one of the many ways we support our business clients. If you want this support for you or your business, start here
