What are Tax Bands (or Cut-Off Points)?

A tax band defines the level of salary between which you pay income tax at either the 20% or 40% rates. The following are tax bands for the current year and are applied in payroll processing:

Single or Widowed (without dependent children)
First €33,800 @ 20%, Balance @ 40%

Single or Widowed (qualifying for One Parent Family tax credit)
First €37,800 @ 20%, Balance @ 40%

Married Couple or Civil Partners (one income)
First €42,800 @ 20%, Balance @ 40%

Married Couple or Civil Partners (two incomes)
Up to €67,600 (increase limited to the amount of the second income – see example below), Balance @ 40%

One Parent Family
First €37,800 @ 20%, Balance @ 40%

In 2017, the standard rate cut-off point for a married couple or civil partners is €42,800. If both are working, this amount is increased by the lower of the following; €24,800 or the amount of the income of the spouse or civil partner with the smaller income.

If one person is earning €48,000 and their spouse or civil partner is earning €25,000 the standard rate cut off point for the couple is €42,800 plus €24,800. The increase in the standard rate band is not transferable between spouses or civil partners, so the first spouse or civil partner’s tax bands would be calculated as €42,800 @ 20% = €8,560 and €5,200 @ 40% = €2,080.

The second spouse or civil partner’s tax bands would be calculated as €24,800 @ 20% = €4,960 and €200 @ 40% = €80.

Please also read this useful Revenue page on Calculating your Income Tax

(Source: Revenue & Citizens Information)

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All the best,
The Team at Jefferson