Introduction
From January 2016, a new PRSI tax credit was introduced for PRSI subclasses AX, AL, A9, HX and A7. This means that employees in these sub-classes should have their employee's PRSI reduced by a maximum of €12 per week.
How Payback Calculates the monthly PRSI tax credit
PRSI is a weekly based tax, based on insurable weeks. To get monthly rates and amounts a multiplier is used.
Some payroll products use this to calculate the monthly credit:
(Weekly credit x 52)/12 = 52
However, there are more than 52 weeks in a year. (365/52 > 7)
We use this multiplier to convert to monthly credit:
(weekly credit / 7) = Daily credit
(daily credit * 365) = Annual credit
(Annual credit /12) = monthly credit
This gets the more accurate figure for monthly credit taking into account that there are 365 days in a year and not 364. Payback always uses a multiplier which favours the employee.