Tax Code

Tuesday, 9 November 2021

Questions (117, 121)

Neale Richmond

Question:

117. Deputy Neale Richmond asked the Minister for Finance the measures taken in the Finance Bill to adjust tax bands; and if he will make a statement on the matter. [54310/21]

View answer

121. Deputy Jennifer Carroll MacNeill asked the Minister for Finance the changes that have been made to tax bands and tax credits; the expected benefit of same to persons; and if he will make a statement on the matter. [54342/21]

View answer

Written answers

Minister for Finance

I propose to take Questions Nos. 117 and 121 together.

In Budget 2022 I announced a substantial income tax package and some changes to the Universal Social Charge (USC) that will ensure that every income-earner paying income tax or USC in 2022 will see an increase in their net income in 2022, all other factors being equal. This will support living standards as the economy continues to recover, while preserving a broad and stable income tax base, to ensure that our personal taxation system is both competitive and resilient.

From 1 January 2022, it is proposed that the main tax credits, that is, the personal tax credit, the employee tax credit and the earned income credit will be increased by €50 each to €1,700, broadly a 3% increase. In addition, it is proposed that the standard rate cut-off point for a single person will be increased by €1,500 to €36,800 (4% increase), with commensurate increases in the bands applying to married persons and civil partners.

In relation to the USC, to ensure that a full-time worker on the minimum wage, who will benefit from the increase in the hourly minimum wage rate from €10.20 to €10.50, will remain outside the top rates of USC, the ceiling of the band for the 2% rate of USC will be increasing from €20,687 to €21,295 with effect from 1 January 2022. In addition, the reduced rate of USC for medical card holders will be extended for a further year.

To answer the Deputy's specific question regarding the expected benefit of these changes, I would note that the precise amount by which an individual will benefit will be dependent on their personal situation, such as their earnings, marginal tax rate and the tax credits they are eligible to claim based on their individual circumstances. However the changes announced in the Budget will ensure that, all those income earners currently paying income tax and/or USC should expect to see a benefit.

The following tables set out the increases to the tax credits, tax bands and USC thresholds as announced in Budget 2022.

Further details can also be located on Revenue's website- www.revenue.ie/en/corporate/press-office/budget-information/2022/budget-summary-2022.pdf.

Tax Credits

Tax Credit	2021 €	2022 €
Single Person	1,650	1,700
Married or in a Civil Partnership	3,300	3,400
Employee Tax Credit	1,650	1,700
Earned Income Tax Credit	1,650	1,700
Widowed Person or Surviving Civil Partner (without qualifying child)	2,190	2,240

Tax Rates and Tax Bands

Personal Circumstances

2021 €

2022 €

Single or Widowed or Surviving Civil Partner (without a qualifying child)

35,300 @20%

Balance @40%

36,800 @20%

Balance @40%

Single or Widowed or Surviving Civil Partner (qualifying for single person child carer credit)

39,300 @20%

Balance @ 40%

40,800 @20%

Balance @ 40%

Married or in a Civil Partnership, one Spouse or Civil Partner with income

44,300 @ 20%

Balance at 40%

45,800 @ 20%

Balance @ 40%

Married or in a Civil Partnership, both Spouses or Civil Partners with income

44,300 @ 20%

With increase of 26,300 max.

Balance @ 40%

45,800 @ 20%

With increase of 27,800 max.

Balance @ 40%

USC Thresholds

2021 €	Rate	2022 €	Rate
Income up to 12,012	0.5%	Income up to 12,012	0.5%
Income from 12,012.01 to 20,687	2.0%	Income from 12,012 to 21,295	2.0%
Income from 20,687.01 to 70,044	4.5%	Income from 21,295.01 to 70,044	4.5%
Income above 70,044	8.0%	Income above 70,044	8.0%

Question No. 118 answered with Question No. 93.