Reference

The second tax system that lives beside the first.

PRSI, USC, National Insurance, and FICA are not income tax — they are social-insurance charges that fund pensions and healthcare. They behave like income tax, they reduce your take-home like income tax, and most personal financial planning forgets about them.

Why a separate system

Most developed economies finance public pensions, unemployment insurance, and healthcare through dedicated social-insurance contributions rather than (or in addition to) general income tax. The contributions are nominally hypothecated to specific funds, although in practice the cash flows through the general government budget. The administrative separation persists because:

Entitlement to specific benefits (state pension, jobseeker's allowance, healthcare) often depends on documented contribution history.
Self-employed and employed contribution rules typically differ; a parallel system makes the differences clean to administer.
The accounting fiction of a hypothecated fund is politically useful even when the cash is fungible.

The four big jurisdictions

Ireland: PRSI + USC

PRSI (Pay Related Social Insurance). 4.1 % on income above €352/week (~€18,304/year) for Class A employees. No upper cap. Funds the Social Insurance Fund (state pension, illness benefit, jobseeker's, maternity).
USC (Universal Social Charge). Progressive on income above €13,000: 2 % to €25,760, 4 % to €70,044, 8 % above. Self-employed pay an extra 3 % on income above €100,000. Funds the general budget; introduced as a temporary austerity measure in 2011, became permanent.

United Kingdom: National Insurance

Class 1 employee NI. 8 % on income between £12,570 and £50,270; 2 % above £50,270. Funds the State Pension, Universal Credit, NHS allocation.
Class 1 employer NI. 13.8 % on most earnings above £9,100. Not paid by the employee but reduces gross compensation available to the employer.
Class 2 / Class 4 (self-employed). Different scheme covering similar entitlements at different rates.

United States: FICA

Social Security (OASDI). 6.2 % on income up to the wage base ($168,600 in 2024). Above the cap, no further Social Security tax. Funds Old-Age, Survivors, and Disability Insurance.
Medicare. 1.45 % on all earned income, no cap. Plus an additional 0.9 % Medicare surtax above $200k single / $250k married. Funds Medicare healthcare for over-65s.
Self-employed (SECA) pay both the employee and employer halves: 12.4 % Social Security + 2.9 % Medicare = 15.3 % total, with the deductible-half adjustment.

Continental Europe (sample — Germany)

Pension insurance: 18.6 % (employee + employer split), capped at €87,600/year (West).
Unemployment insurance: 2.6 % (split).
Health insurance: 14.6 % (split) plus an additional 1–2 % supplemental.
Long-term care insurance: 3.4 % (split) plus 0.6 % surcharge for childless workers.

The cap matters — sometimes

FICA Social Security caps at the wage base, German pension and health-insurance caps, and Irish PRSI has no cap. The presence or absence of a cap dramatically changes the marginal-rate profile for high earners:

US high earner above $168,600: Social Security drops out, leaving only 1.45% Medicare + 0.9% surtax. Effective marginal social charge is ~2.4 % above the cap, vs. 7.65 % below.
Irish high earner: PRSI continues at 4.1 % indefinitely, plus USC at 8 % above €70,044. Combined social charge marginal rate stays at ~12 % on top of income tax.

The trap

Personal financial planning that compares jurisdictions on income tax alone misses 5–15 percentage points of effective burden. The Irish marginal rate of 40 % income tax sounds comparable to UK 40 %, but PRSI plus USC adds another 12 % on top in Ireland, vs. UK Class 1 NI at 2 % above the upper threshold. The realised marginal rate gap is much larger than the headline income-tax rates suggest. Always include social charges in cross-jurisdiction comparison.

What the calculator includes

The main calculator layers the relevant social-charge schedule on top of the income-tax computation for each jurisdiction. The output reports income tax and social charges as separate lines so you can see each component clearly. The bracket-by-bracket breakdown applies to income tax only; social charges are reported as a single combined figure.