Payroll Taxes | Understanding your Payslip

Описание: When I started working I always had issues because I never knew how to breakdown the taxes that were present on my payslip. In this video I will explain all the payroll deductions that may be apart of your payslip.

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Payroll Calculations
Pension – Gross Salary * 5%(min contribution)
NIS – (6% * Threshold (1.5M)/12)/2 for Max contribution
NHT – Gross Salary * 2%
Education Tax – (Gross Salary – Pension – NIS) * 2.25%
Income Tax Threshold – 1,500,096.00
Income tax – ((Gross Salary – Pension – NIS) – threshold ) * 25%


So this is a basic pay stub. It has your name, your trn, Nis, the department that you are in, Employee #, Pay date and the period that have gone some pretty basic stuff
Here this is the taxable salary so I make 150k before taxes. I only get my basic pay I don’t have any other allowances. Some persons may have a number of other things on their pay slip such as Travelling which in some instances in not taxable so you would get the full travelling amount. If you get lunch for example it should be a part of your taxable pay. But let’s get back to my pay slip. On the right here we have all the taxes that are taken from my pay before I get it. This is one of the reasons why it’s good to be an entrepreneur when you are employed before you get paid taxes are collected you don’t have any control over that. As an entrepreneur taxes are paid after you do everything. In Jamaica taxes are paid March 15 for December 31 of the previous year so December 2019 taxes were paid March 2020. But that is for another video. At the bottom here we have the aggregate for the taxes and such that have been collected so far as this pay slip is for April. So all these should be for four periods.
At the top we have Income tax, then pension, Nis, NHT and lastly Education tax. While Income tax is at the top it is the last one that we are going to do today. So first we will look at your pension contribution. This is a tax free allowance so you will be able to plan for retirement. It doesn’t go directly to you and will have to be paid over to an approved pension plan on a monthly basis. This is normally taken at a rate of 5% from your pay but you can opt to take more on a monthly basis up to about 15% but you can’t do less than 5%.
Next we have NIS this is taken as 6% of your salary up to 1.5 million. So I will pay 3,750 on a monthly basis. This 3750 is the maximum that I will pay monthly because my yearly salary is more than the 1.5m threshold per year. If you are a math person then we know that 3750 per month for 12 months is 45000 which is 3% of 1.5m. This is because you employer is responsible for paying the other 3%. Over the next few years however the 1.5m threshold will be gradually raised.

Next we have your NHT this I think is the simplest one as it is taken as 2% of your gross salary per month. As you can see calculating your NHT is pretty simple.
Ok now we will look at Education Tax. Education Tax is calculated at a rate of 2.25% but not on your gross salary. You will need to take out your pension contribution and NIS.
Lastly we will look at income tax now if there was a big bad wolf of pay roll taxes then this is it right here. But you will get some help with it in the form of a threshold. Currently the tax threshold is approx. 1.5m so all of your yearly salary up to this 1.5 should not have income tax deducted. You will have to pay the other tax types but not income tax. One you start making over 1.5 this is where it hops on to your pay check. I make 150k per month which is 1.8 million per year so I have 300 of my yearly salary that will be subject to income taxes. This works out to 25k per month. Out of this 25k per month we still get some help because our pension contribution is taken out as well as my NIS contribution so only about 13k plus is taxed. This 13k plus is taxed at a rate of 25%. Now can you imagine if we didn’t have the threshold how much tax we would have to pay? Plus the threshold of 1.5 is great because it used to be about 550k there abouts per year. One more thing if you are one of those persons making over 6m per year then what you make over the 6m is taxed at a rate of 30% and not the standard 25% so just keep this in mind.

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Disclaimer: All views expressed here are my personal opinions. For more in-depth and specific information speak to a licensed investment advisor.