Savings interest to be hit with tax rate of 45% after PRSI levy and DIRT hike

The effective tax rate on interest earned on savings will be as high as 45% as both the new higher rate of Deposit Interest Retention Tax (DIRT) tax and the PRSI levy on unearned income will both come into force on Jan 1.

Finance Minister Michael Noonan announced in the budget that the DIRT rate would be increased to as high as 41%.

However, it has emerged that a second tax will operate in conjunction with the DIRT tax and will be also be applied to unearned income such as earnings from rents, dividends and deposit interest.