Budget 2027: Wiggle room for tax band increases but USC going nowhere 

Simon Harris said that he wants to 'make work pay' for the 'people who get up early in the morning'. Picture: PA Wire

After the absence of a tax package in last year’s budget, all eyes will be on the changes finance minister Simon Harris announces as part of Budget 2027.

The Tánaiste has said that he wants to “make work pay” for the “people who get up early in the morning”.

But what does that mean, and how much money will it put back in your pocket?

Tax bands 

Under the current system, workers pay 20% tax on the first €44,000 of their earnings. Anything over this is taxed at 40%.

Under plans to be unveiled as part of Budget 2027, it is expected that the entry rate for the higher rate of tax will be increased to at least €46,000. 

However, sources told the Irish Examiner that there could be wriggle room to do more.

If the tax band increases from €44,000 to €46,000, it would put €400 back in people’s pockets.

Tax credits 

Sources told the Irish Examiner that the personal tax package will comprise both tax band changes and changes to tax credits.

While the details of the tax credits are still to be determined, it is expected that it will increase people’s take-home pay to over €500 a year when combined with the band changes.

Universal Social Charge (USC) 

The much-hated USC is going nowhere, but there could be slight changes to how much you pay.

When the minimum wage increases, the 2% band of USC typically increases.

The Low Pay Commission recommended the minimum wage be increased by 79c to €14.94. However, whether this will happen is still up in the air, amid concerns about loading too many costs on businesses.

While multiple parties called for the USC to be abolished outright or abolished on earnings up to a certain threshold, this is not going to happen in Budget 2027.