Dear Career Advisor:

I recently graduated from college and will be starting my first job on the first of October. I have been made a reasonable salary offer, for which I am grateful. I am not, however, clear as to how much will actually be my take-home pay. I know I will have to pay income tax. How much will this be and what else if anything will I need to pay?

Yours truly,

Vanessa

Dear Vanessa:

Congratulations on landing your first job and on taking the initiative to try to forecast and plan ahead of the actual receipt of your first pay cheque.

Receiving your first pay cheque can be a real delight, but it could also come as a shock if you are not adequately informed as to what to expect. Knowing how much you will actually receive, or at least a reasonable estimate, can prevent the disappointment that many new hires face as they erroneously anticipate receiving the gross figure stated in their contract of employment.

Under Jamaican law, employers must make the statutory deductions at the time salaries are paid to all workers. There are four such deductions: Income Tax, using the Pay as You Earn (PAYE) model; National Insurance Scheme (NIS), Education Tax (Ed. Tax), and National Housing Trust (NHT) contribution. Your payroll officer or human resource manager will be able to provide guidance in understanding exactly how the statutory deductions are calculated. Notwithstanding, I will provide you with the following general guidelines:

NIS

This is 2.5 per cent of your salary, up to a maximum of $3,125 per month.

Income Tax/PAYE

There is a tax-free amount of $557,232.00 annually or $46,436.00 monthly or $10,716.00 weekly. Depending on your pay cycle, subtract your NIS requirement and the tax-free amount from your gross salary, then calculate 25 per cent of the remainder to determine the amount you will pay for income tax.

Education Tax

This tax does not have a ceiling. To calculate, subtract the NIS amount from your gross salary then find 2.25 per cent.

NHT

This is payable on all taxable emoluments at a rate of 2 per cent.

Your organisation may have provisions for other deductions such as contributions to a pension scheme or health insurance. Avoid the stress of trying to calculate the deductions by yourself. Let the professionals at your company provide guidance.

I wish for you a successful and productive tenure on your new job.

Sincerely,

Career Advisor

Carolyn Marie Smith is Director of Career & Employment Services at Northern Caribbean University. Submit your questions to her at careeradvisor@ncu.edu.jm