Example : How to Calculate USC: Step-by-Step

Imagine you earn €30,000 in a year. Here's how you calculate the USC you need to pay:

Step 1: Calculate USC on the First Band (2% on €10,036)

• Start with the first €10,036 of your income. This portion is taxed at 2%.
• Calculation: $10,036 \times 0.02 = €200.72$

• Explanation: This means that for the first €10,036 you earn, you pay €200.72 in USC. We multiply €10,036 by 0.02 (which is 2%) to find this amount.

Step 2: Calculate USC on the Second Band (4% on €5,980)

• After taxing the first €10,036 at 2%, we move on to the next €5,980 of your income, which is taxed at 4%.
• First, figure out how much of your income is left after the first band: $30,000 - 10,036 = €19,964 \quad \text{(income left after the first band)}$
• Now, calculate the USC for the next €5,980 at 4%: $5,980 \times 0.04 = €239.20$

• Explanation: After taxing the first €10,036 at 2%, we only apply the 4% rate to the next €5,980 of your income. We do not tax the first €10,036 again—once a portion of your income is taxed at one rate, it doesn't get taxed again at a higher rate. So, the €5,980 portion is taxed at 4%, giving us €239.20 in USC.

Step 3: Calculate USC on the Remaining Balance (7% on €13,984)

• After applying the first two bands, we still have some income left to tax. The remaining balance is: $19,964 - 5,980 = €13,984$
• This remaining €13,984 is taxed at 7%. So, calculate: $13,984 \times 0.07 = €979.88$

• Explanation: The rest of your income (€13,984) is taxed at 7%, resulting in €979.88 in USC. Just like before, we only tax this remaining balance at the 7% rate because the earlier portions of your income were already taxed at lower rates.

Step 4: Add All the USC Amounts Together

• Finally, add up all the USC amounts from each band to find out the total USC you owe: $200.72 + 239.20 + 979.88 = €1,419.80$

• Explanation: By adding the USC from each band, you find that the total USC you owe on an income of €30,000 is €1,419.80. This is the total amount you have to pay.