Increased tax rate threshold and tax credits for renters among Budget 2023 provisions 

Minister for Public Expenditure and Reform Michael McGrath, and Minister for Finance Paschal Donohoe, at Government Buildings to iron out budget details. Picture: Damien Storan

The Government will sign off on a large increase to the point at which people pay the top rate of tax to bring it close to €40,000, in the soon-to-be announced budget for 2023.

At present, the higher 40% tax rate kicks in on income over €36,800 for a single person. Finance Minister Paschal Donohoe is set to raise this point by €3,200, with a similar increase for married couples or those in a civil partnership on one income.

It is also expected that there will be additional tax credits for renters of between €200 and €400, with the final amount yet to be agreed.

The Irish Examiner understands there will be a 50-cent excise hike on a pack of 20 cigarettes, but it has been confirmed that there will be no changes to alcohol excise.

The current cut in fuel excise will be extended to February at least, and it is likely to be extended beyond that.

On the Universal Social Charge (USC), the only move likely will be to ensure minimum wage increases don’t negatively impact low-income earners.

The help to buy scheme, which helps first-time buyers purchase a newly-built house or apartment and which was due to end in December, is to be extended.

The scheme applies to once-off self-build homes and only applies to properties that cost €500,000 or less.

In light of an exchequer surplus of €4.4bn, Government sources have made clear that the rainy day fund is to get €1bn at least.

The €3bn plus cost-of-living package is to include electricity credits amounting to €600 per household, spread over two or three bills.

An extension to the 20% reduction on public transport fares will also be agreed.

It is unlikely that the VAT cut for the tourism and hospitality sectors will be extended beyond February.

An increase in welfare payments is likely to be at least €10 per week, but a €20 increase has been ruled out by Minister for Social Protection, Heather Humphreys.

She said a €20 increase would be "very ambitious," and would mean that there will not be money left for other measures. she added:

No matter what we do, it will never be enough.

Ms Humphreys also said that a double child benefit payment is under consideration.

A “gulf of several hundred million euros” remained yesterday between Ministers Stephen Donnelly and Michael McGrath over the amount of money for the health budget in 2023.

It is understood that Mr Donnelly may have to delay or abandon some of his desired new measures such as eliminating hospital charges, which may not be introduced until some point next year.

The Government is in a frantic dash to sign off on a €10bn package to be unveiled tomorrow.

Ministers Michael McGrath and Paschal Donohoe are still locked in talks with other line departments to agree on their funding for 2023 worth €6.7bn, and an estimated €3bn cost-of-living package.

A meeting was held last night with the three government party leaders and the finance ministers to sign off on the overall package, which will bring Government spending to over €90bn.