Cormac Devlin
Question:158. Deputy Cormac Devlin asked the Minister for Finance the number of persons impacted by income tax changes brought in on 1 January 2023; and if he will make a statement on the matter. [3081/23]
View answerTuesday, 24 January 2023
Questions (158)
Written answers
As the Deputy will be aware, Budget 2023 included a significant income tax package amounting to a cost of €1.13 billion in 2023 and consisted of both personal income tax and Universal Social Charge (USC) changes.
In relation to the income tax changes, the Standard Rate Cut-Off Point for single persons was increased by €3,200 or 8.7 per cent from €36,800 to €40,000, with commensurate increases for persons who are married/in civil partnerships. In addition, the main tax credits – the personal tax credit, employee tax credit and earned income credit - were all increased by just over 4.4 per cent or €75 each from €1,700 to €1,775. The home carer tax credit was also increased by €100 from €1,600 to €1,700 which equates to a 6.3 per cent increase. Overall, it is expected that 2.1m taxpayers (64 per cent of all taxpayer units) will benefit from Budget 2023 income tax package measures, with the balance of taxpayers generally exempt from income tax or their income tax liability being offset by their tax credits.
It is also important to point out that the income tax changes were carefully designed to ensure that workers do not find themselves in a position where they pay more income tax solely as a result of wage growth inflation in 2023. For example, due to the Budget changes, it is estimated that 44,400 taxpayer units will remain outside the income tax net and 98,800 taxpayer units will be removed from the higher rate of income tax.
Turning to the USC, the ceiling of the band for the 2 per cent rate was also increased by €1,625 from €21,295 to €22,920. This will ensure that a full-time worker on the minimum wage, who benefited from the increase in the hourly minimum wage rate from €10.50 to €11.30, will remain outside the top rates of USC. It is estimated that this change will benefit around 1.6m taxpayers. It is also worth pointing out that the USC concession for medical card holders who earn less than €60,000 per annum was extended for a further year, which means such individuals will continue to pay a reduced rate of USC in 2023. It is tentatively estimated that this measure will benefit around 120,000 taxpayer units.
Further details of the Budget 2023 tax measures can be located at the following link:
www.gov.ie/en/publication/ccc22-budget-2023-taxation-measures/