Tuesday 17 May 2022

Impact of tax changes on salaries will be eaten up by inflation

Tax and premium changes which came into effect this year will only have a marginal impact on take-home pay, according to salary processing company ADP.

More than that, inflation is set to offset the impact of any pay rise, ADP said in its 2022 salary impact update. Inflation is forecast to reach between 3.8% and 5% in 2022.

Average wage earners can expect to see their take-home pay rise by around €9 a month, ADP said, while low-income part-timers may actually see a slight reduction in the size of their pay packets.

Minimum wage earners will get a €19 a month boost while people earning twice the average – or some €6,000 a month –  will take home an extra €24.

The agency also warned about the impact of the new tax-free €2 a day allowance which employers can pay staff who work at home from 2022. People who work permanently from home for one day or more a week will no longer be entitled to a tax-free travel allowance on those days, which is often far more.

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