PAYE workers will benefit from changes to tax bands and USC

PAYE and earned income tax credits will rise by €100 each, the 4.5% rate of USC will be cut to 4%, and the income threshold for paying USC at all will be upped to €25k

Finance Minister Michael McGrath and Public Expenditure Minister Paschal Donohoe fielding questions at a press conference in Government Buildings after their Budget 2014 statements in Dáil Éireann. Picture: Sasko Lazarov/Rolling News

Workers are to benefit from Budget 2024 changes to income tax bands and adjustments to USC rates under a personal income tax package worth €1.3bn, with relief also coming for mortgage holders, landlords, and renters.

Finance Minister Michael McGrath told the Dáil that employee PAYE and earned income tax credits will be increased by €100 each.

The Government is increasing the standard rate of income tax cut-off point by €2,000, bringing entry to the higher rate up to €42,000.

The 4.5% rate of USC will be cut to 4%. Mr McGrath said this is the first reduction in USC rates in five years.

To ensure lower-income workers remain outside the higher rates of USC, entry to the 4% rate will be increased to €25,760, meaning a full-time worker on the minimum wage will see an increase in their net take-home pay of around €2,300. Mr McGrath said: 

Taking the example of a single person earning €46,000 in 2024, they will see an increase of over €2,000 in their net income as a result of cumulative income tax and USC changes since 2021.

However, duty on a packet of 20 cigarettes will go up by 75c. This will bring the price of cigarettes in the most popular price category to €16.75. Mr McGrath said that, in light of public health interests, he is proposing to bring in a new domestic tax on e-cigarettes, but this will require new legislation.

Two long-term funds are to be set up to put corporation taxes aside for health, pensions, and climate change.

Finance Minister Michael McGrath told the Dáil that surpluses in the coming years will provide an “opportunity to prepare now for the challenges we know are on the horizon”.

He said the department now estimates that the windfall corporation tax receipts stand at around €10bn to €12bn.

Housing Minister Darragh O’Brien in Government Buildings for the post-budget press conference. In changes in his portfolio, landlords will be given tax relief to the value of €600 this year if they agree not to sell their houses for four years. Picture: Sasko Lazarov/Rolling News

The first fund will be called the Future Ireland Fund, which Mr McGrath has said is “not a rainy-day fund, because it is for costs that we know are coming our way in the years ahead”.

Annually, the Government will invest 0.8% of GDP into this fund between 2024 and 2035, with €4.3bn being put in next year alone.

He said this fund will help meet the costs of running the State in the future, including in the areas of healthcare, pensions, homecare, and more.

“We know we are facing considerable costs in relation to an ageing population, age-related spending will be around €7bn to €8bn higher by the end of this decade,” he told the Dáil.

The second fund, which will be called the Infrastructure, Climate and Nature Fund, will see a €2bn contribution from the dissolution of the National Reserve Fund next year.

The fund will have a climate and nature component worth over €3bn, the aim of which is to help the achievement of carbon budgets through capital projects.

This fund will grow incrementally by €2bn for seven consecutive years when it will reach €14bn plus interest accrued.

The budget also saw:

• Vacant homes tax raised to five times the property’s local property tax rate;
• The residential zoned land tax liability date extended for a year;
• The legislation to see corporation tax rise to 15% announced;
• A suite of business tax credits including relief for angel investors.

A new relief scheme designed for those with an outstanding mortgage balance on their primary dwelling house of €80,000 to €500,000 as of the end of last December comes as recent Central Bank figures show the number of mortgage customers in short-term arrears is edging higher.

The relief is aimed at those with variable or tracker mortgages who have been hardest hit by ECB rate increases. Mr McGrath said yesterday the scheme would assist 165,000 homeowners.

Renters will be able to claim a €750 tax credit, up from €500, and landlords will be given tax relief to the value of €600 this year if they agree not to sell their houses for four years.

Mr McGrath also said that the Government would embark on an information campaign aimed at letting people know about tax credits that have been unclaimed. He said that around €180m every year goes unclaimed.

Mr McGrath also said that the help-to-buy scheme for first-time buyers would be extended to 2025 and would now cover affordable purchase homes.