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Personal Taxation - Coggle Diagram
Personal Taxation
Calculating Tax Liability (Individual or Household)
Step 1 — Calculate Gross Income
Total earnings before tax (salary, wages, bonuses).
Step 2 — Income Tax Calculation
Apply the 20% standard rate up to the relevant rate band.
Apply 40% to any income above the band.
Step 3 — Subtract Tax Credits
Basic credits:
Single Person Tax Credit
Employee (PAYE) Tax Credit
Additional credits: Home Carer, Incapacitated Child, etc.
Tax liability cannot go below €0.
Step 4 — Calculate USC
Apply USC rates to gross income:
Different bands dependent on income thresholds.
Step 5 — Calculate PRSI
Usually 4% for most workers earning over €352 per week.
Step 6 — Add Taxes Together
Income Tax after credits + USC + PRSI = Total Tax Liability
Role of Taxation in a Modern Economy-
Funding Public Services
Education, healthcare, policing, welfare payments, transport, public housing.
Redistributing Wealth
Progressive taxes (e.g., Income Tax) reduce inequality.
Regulating Behaviour
Taxes discourage harmful activities (e.g., carbon tax, sugar tax).
Economic Stability & Development
Government can increase or reduce taxes to influence spending and inflation.
Supporting Infrastructure
Roads, broadband, utilities, public transport.
Personal Responsibilities in Relation to Taxation-
Registering with Revenue when starting work or receiving taxable income.
Ensuring Accurate Personal Information
PPS number, employment details, claiming correct credits.
Understanding Pay-Related Taxes
Knowing how Income Tax, USC, and PRSI are calculated.
Keeping Financial Records
Receipts, documents for claiming tax credits or refunds.
Paying Taxes on Time
Avoiding penalties or interest.
Major Household and Personal Taxes in Ireland-
Income Tax
Progressive tax with standard (20%) and higher (40%) rates.
USC (Universal Social Charge)
Applied on gross income; several bands.
PRSI (Pay Related Social Insurance)
Funds social welfare benefits and pensions.
Capital Gains Tax (CGT)
Applied to profits from selling assets (33%).
Capital Acquisitions Tax (CAT)
Tax on gifts and inheritances.
Household Taxes
Local Property Tax (LPT)
Annual tax on residential property value.
Motor Tax
Based on vehicle emissions or engine size.
VAT (Value Added Tax)
Tax on goods and services, included in prices.
Excise Duties
Alcohol, tobacco, fuel.
Stamp Duty
On property purchases or financial transactions.