In 2016, the Organisation for Economic Co-operation and Development ranked Irish personal taxation as the second most progressive tax system.
That means that the top 10% of Irish earners pay 60% of the country’s total taxes. That means that modest and middle-grade earners get to keep more of their money.
But an Irish paystub with all those acronyms can be difficult to read. If you have trouble understanding pay stub deductions, read on.
What’s a Pay Stub?
The Payment of Wages Act 1991 gives all employees a right to a pay stub. This slip is a physical or digital record that lists details about an employee’s pay.
It itemizes the wages you’ve earned for the current pay period. Your employer may use a paycheck stub maker to make pay stubs for all employees.
Whether you get a pay cheque or an automatic deposit into your banking account, you will get a pay stub.
Reading a Pay Stub
Each paystub contains several important details such as hours worked, vacation pay and deductions.
On your pay stub, you’ll see your taxable earnings and your gross pay. This is the money you earned during that pay period before taxes and deductions.
You’ll also see your net pay. It is the actual amount you get deposited into your account. This is how much money you actually get to keep.
You will also see all your deductions line by line. For example, tax deductions and retirement contributions.
If you get paid vacation or sick days, you will see how much time off you used. Often you will see how much vacation time or sick days you have left for the year.
Now let’s look at each of the items you can expect to see on your pay stub.
In Ireland, taxes are withdrawn through a pay-as-you-earn (PAYE) system.
Your taxes are deducted monthly from your gross salary. The amount of tax you pay depends on your individual circumstances.
Tax deductions include income tax, Pay Related Social Insurance and the Universal Social Charge (USC).
If you want to pay fewer taxes, check out these tips to beat the tax man.
PRSI stands for Pay Related Social Insurance. These contributions go towards Social Welfare benefits and pensions. Most people working in Ireland pay into PRSI.
The amount you pay depends on your job, earnings, and what PRSI class you’re in. You may be entitled to a rebate depending on your personal circumstances.
Retirement Savings Plans
If you choose, you can contribute to a retirement savings plan. You pick what percentage of your salary you want to save towards retirement.
You’ll see a line on your paycheck that lists how much you contributed to your retirement savings plan that pay period. It may also show how much you’ve contributed for the year to date.
Final Thoughts on Understanding Pay Stub Deductions
Thanks for reading! Understanding pay stub deductions don’t have to be confusing. If you are still unsure of your deductions, contact your company’s HR department.
They will be able to go through your pay stub and explain how to read a paycheck.
Next, learn why workplace decoration should include scented candles.