Credits and rate bands
The income tax standard rate bands will increase as follows:
Single, widowed or surviving civil partner from €36,800 to €40,000;
Single, widowed or surviving civil partners, qualifying for the Single Person Child Carer Credit from €40,800 to €44,000;
Married couples or civil partners (one income) from €45,800 to €49,000;
Married couples or civil partners (two incomes) from €45,800 to €49,000 (with an increase of €31,000 max)
The personal tax credit, the employee tax credit and the earned income tax credit will all increase from €1,700 to €1,775. The home carer tax credit will increase from €1,600 to €1,700.
Marginal tax rate payers will receive an additional € 830 in their take home pay, when USC changes are factored in (discussed below), while those earning below the standard rate band threshold will have the opportunity to earn additional income without paying tax at the marginal rate.
The estimated cost of these measures is €1.226 billion on a full year basis.
To ensure that the salary of a full-time worker on the minimum wage will remain outside the 4.5 percent rate of USC when the minimum wage increases from €10.50 to €11.30 from 1 January 2023 the ceiling of the second USC rate band will increase from €21,295 to €22,920.
Workers with income above €22,920 will also benefit.
The USC Rates & Bands from 1 January 2023 will be:
€0 – €12,012 @ 0.5% – no change
€12,013 – €22,920 @ 2%
€22,921 – €70,044 @ 4.5%
€70,045+ @ 8%
Self-employed income over €100,000: 3% surcharge
*Incomes of less than €13,000 are exempt from USC.
The estimated cost of these changes in USC is €67 million in 2023 and €77 million per annum thereafter.
The Minister also announced the extension of the reduced rate of USC for medical card holders by a further year. This measure is revenue neutral as it is already included in the tax base.