Changes to how individuals are taxed will translate to savings of $600 to $1,400 per month, depending on how much you earn and if you were already earning above the new income tax threshold.
The threshold was increased from $441,168 to $507,312 effective January 1.
This means that $66,000 more of your annual income will not be subject to personal income tax of 25 per cent, if you were already earning $510,000 a year or more.
Also, the ceiling on National Insurance Scheme (NIS) contributions was increased from $1 million to $1.5 million, which means that an additional $12,500 will come out of your salary and go towards the statutory pension fund before income tax is applied to your income.
The net effect is that for persons presently earning between $510,000 and $1 million, their monthly take home should increase by just under $1,400 this month.
For persons earning between $1 million and $1.5 million, the additional savings gradually declines as the income gets higher in the range until it reaches $600 a month. In other words, persons earning $1.5 million and up, should see an additional $600 a month on their pay check going forward.
For companies not regulated by the Financial Services Commission (FSC), Office of Utilities Regulation (OUR), Bank of Jamaica (BOJ), and the Ministry of Finance and Planning (MOFP), their corporate income tax was lowered from 33 1/3 per cent to 25 per cent.
With the reduction in the CIT, unregulated companies, including many small businesses will now benefit from a savings on the income tax they are required to pay to the tax authorities.
Individuals and unregulated companies are being reminded by Tax Administration Jamaica that the new threshold and new tax rate are not to be applied in computing their final income tax for assessment year 2012.
"They should however be used in computing the estimated income tax for assessment year 2013," said the TAJ in a release last week.
Both the final income tax return for 2012 and the estimated income tax return for 2013 are due to be filed on or before the Income Tax filing due date, which is March 15.