As the Deputy will be aware, the Programme for Government (PfG) commits to “implementing progressive changes in taxation if the economy remains strong, including indexing credits and bands to prevent an increase in the real burden of Income Tax. While in the event of an economic downturn and unexpected deterioration in the public finance we would postpone changes to Income Tax credits or bands, as we did in Budget 2021”.
I am advised by Revenue that the estimated first and full year cost to the Exchequer in 2026 of the Deputy's proposal are €1,270m and €1,455m respectively. This is the cost associated with an increase the personal income standard rate cut-off point from €44,000 to €50,000 per annum, and commensurate adjustments made for all other taxpayer categories.
It should be noted that these figures are based on 2026 estimates from the Revenue tax forecasting model using latest actual data for the year 2023, adjusted as necessary for income, self-employment, and employment trends in the interim.
I am further advised by Revenue that a breakdown of the estimated number of taxpayer units who would benefit from this proposal by personal status can be found in the below table.
|
Status
|
Number*
|
|
Single
|
561,300
|
|
Married couple – both earning
|
315,900
|
|
Married couple – one earning
|
141,600
|
|
Widowed
|
38,200
|
|
All
|
1,056,900
|
*figures are rounded to the nearest hundred.
A taxpayer unit refers to individuals except in the case of couples who are jointly assessed, in which case the couple are counted as one taxpayer unit.
In terms of a distributional impact across income groups, the table below provides information on the number of gainers broken down by income range. It should be noted that the income breakdown relates to gross income rather than taxable income, and includes all taxpayers types, including those who are jointly assessed couples who both have an income source.
|
Range of Gross Income €
|
Number of Taxpayer Units Benefitting
|
|
0 - 40,000
|
0
|
|
40,000 - 50,000
|
120,900
|
|
50,000 - 60,000
|
178,800
|
|
60,000 - 70,000
|
137,100
|
|
70,000 - 80,000
|
100,000
|
|
80,000 - 90,000
|
68,700
|
|
90,000 - 100,000
|
54,600
|
|
100,000 +
|
396,900
|
|
All
|
1,056,900
|
My Department publishes regular updates in relation to indexation of the income tax system. In recent years, information on the indexation of standard rate bands and tax credits has been included in the annual Income Tax – Tax Strategy Group paper. Most recently the Budget 2026 Income Tax – Tax Strategy Group paper sets out information relating to indexing the income tax system, including the estimated costs to the Exchequer.
In addition, costs are also provided in relation to the adjustment of income tax standard rate bands, credits and rates and USC rates and thresholds. The costs used in these publications are based on Revenue Ready Reckoner publications.
