Universal Social Charge

Thursday, 4 July 2024

Questions (239)

Jim O'Callaghan

Question:

239. Deputy Jim O'Callaghan asked the Minister for Finance how changes in income tax bands and the universal social charge since July 2020 have benefitted those paying; and if he will make a statement on the matter. [28933/24]

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Written answers

Minister for Finance

As the Deputy will be aware, the Programme for Government (PfG), “Our Shared Future” contains a number of specific commitments relating to income tax. These include the commitment that, “from Budget 2022 onwards, in the event that incomes are again rising as the economy recovers, credits and bands will be index linked to earnings. This will be done to prevent an increase in the real burden of income tax, to prevent more low income workers being taken into the tax net because of no changes to the tax system and to ensure there is no increase in the number of people having to pay higher income tax and USC rates.” It also includes a commitment to increase the Home Carer Tax Credit to support stay-at-home parents and those with caring responsibilities.

Significant progress has been made in achieving these commitments. Over the last three Budgets the cumulative increase in the main tax credits and standard rate bands have been substantial and are as follows:

Credit	2021 Value (€)	2024 Value (€)	Cumulative (€) change	Cumulative % change
Single Person	1,650	1,875	225	13.6
Married or civil partnership	3,300	3,750	450	13.6
Employee Tax Credit (PAYE)	1,650	1,875	225	13.6
Earned Income Tax Credit	1,650	1,875	225	13.6
Home Carer Credit	1,600	1,800	200	12.5

Standard Rate Cut-Off Point	2021 Value (€)	2024 Value (€)	Cumulative (€) change	Cumulative % change
Single	€35,300	€42,000	€6,700	19.0
Single Parent	€39,300	€46,000	€6,700	17.0
Married One Earner	€44,300	€51,000	€6,700	15.1
Married Two Earners*	€70,600	€84,000	€13,400	19.0

*Minimum €33,000 allocated to each spouse in 2024

The Budget 2024 tax package focused on tackling child poverty by providing a suite of tax enhancements to assist families with children. For example, the Home Carer Tax Credit, Single Person Child Carer Credit and the Incapacitated Child Tax Credit were increased by around 6.0 per cent.

Turning to the USC, the Government has implemented a policy of ensuring full-time workers on the minimum wage will remain outside the charge to the top rates of USC. Accordingly, the ceiling of the 2 per cent USC rate band has increased cumulatively by 24.5 per cent, from €20,687 to €25,760, over the last three Budgets.

Budget 2024 also reduced the 4.5 per cent rate of USC to 4 per cent. This is the first reduction in USC rates since 2019.

Finally, as part of the overall Budget documentation, the Tax Policy Changes document includes detailed distributional analysis of the tax measures announced in each Budget. The distributional analysis incorporates tables demonstrating the impact of the Budget changes in respect of income tax, PRSI and USC on various household types, including single persons, married couples with and without children, PAYE and self-employed income earners, over a wide distribution of income levels. In relation to Budget 2024, the distributional analysis shows the existing amount of income tax and USC (relating to 2023), and the proposed amount of income tax and USC taking account of the Budget 2024 measures. This distributional analysis is available in respect of the last three Budgets at the following links:

www.gov.ie/en/publication/ccc22-budget-2023-taxation-measures/