On Wednesday, the Government’s tax strategy papers were published ahead of next month's budget.
Among the options laid out in the papers is a change to Ireland's two-rate structure of income tax.
According to the figures put forward in the paper, up to one million people could save up to €1,000 a year.
So what exactly is being proposed and how it will impact you?
There are currently two rates of tax in Ireland, one at 20% and a higher rate of 40% for earnings over €36,800 for individuals, and €45,800 for married earners in one-income households.
This two-rate structure of income tax has been in place since the early 1990s.
The Group has offered two options that the Government could opt for if the decision is taken to introduce a third band.
- Those earning between €36,800 and €41,800 would be taxed at 30%.
This option would cost the Exchequer €525 million a year and would see individuals and married couples with one earner take home an extra €500 a year.
- Those earning between €36,800 and €46,800 would be taxed at 30%.
The second option would cost €945 million for a full year and individuals and married single-income couples would take home an extra €1,000 a year.
Households right across the country are already feeling the impact of inflation and the rise in the cost of living.
The Tax Strategy Group has proposed introducing a third rate of income tax in order to increase the amount an individual can earn before being taxed at the higher rate of 40%.
Under this third, intermediate rate, middle and high-income earners would see a direct increase in their net income.
Adjusting the tax bands, especially at a time of high inflation will increase the purchasing power of those taxpayers.
According to figures from the TSG, around 35% of taxpayers would benefit from the proposal.
Low and modest income earners would not directly benefit from the third tax band.
For this reason, the strategy group suggest other tax measures that would benefit low earners be introduced in tandem with the intermediate rate of income tax.
Some tax reliefs would be impacted if there is a change in the marginal rate of tax.
There are tax reliefs - such as for employee pension contributions and health expenses relief for nursing home charges - which are granted at a taxpayer's marginal rate of tax.
If this marginal rate is decreased, it could result in a reduction in the amount of tax relief they receive.
No. The TSG is not a decision-making body.
The group, made up of senior officials and political advisers from several Civil Servant Departments and Offices, produce a list of options and issues for consideration in the Budgetary process.
The introduction of the 30% tax band would involve a very significant change to the current structure of the income tax system.
It would require huge changes to Revenue's systems as well as payroll providers.
Minister for Finance Paschal Donohoe has said that it is more difficult to make changes in relation to taxation any earlier than normal due to the amount of payroll systems that would need to change.
"The fact that we need every employer in the country to update their payrolls and update the level of tax that they are charging their employees means that it takes a little longer to implement tax changes than it does other policy changes the budget will have," said Mr Donohoe.
Senior Government sources have said it has the “tacit approval” of all three parties in the coalition.