Dáil Éireann Debate, Tuesday - 28 July 2026
794. Deputy Michael Cahill asked the Tánaiste and Minister for Finance to introduce a cost-of-living measure for workers by abolishing the USC for those earning less than €50,000 per year, given that it was originally proposed as a temporary emergency tax; and if he will make a statement on the matter. [57424/26]
View answerAs the Deputy may be aware, the ‘Programme for Government 2025: Securing Ireland’s Future 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 finances we would postpone changes to Income Tax credits or bands, as we did in Budget 2021”.
The policy of the previous Government to index tax credits has meant that the entry point to Income Tax for all income earners has been increasing steadily since 2022. In 2026, the entry point to Income Tax for a single individual is now €20,000 per annum, for a married one earner couple with children is €39,750 per annum and for a married two earner couple is €40,000 per annum. These entry points are now at their highest level.
The entry point to the higher rate of Income Tax has increased significantly in recent years with policy objectives of easing the burden on middle income earners/families and ensuring that workers on average earnings are not subject to the top rate of Income Tax. The single standard rate band has increased by €8,700 or 24.6 per cent over the lifetime of the previous Government.
Over the lifetime of the previous Government amendments to USC were also implemented. The ceiling of the 2 per cent USC rate band was increased to €28,700, in line with increases in the National Minimum Wage. The middle USC rate of 4.5 per cent was also reduced by 1.5 per cent to 3 per cent.
In line with the increase to the National Minimum Wage from 1 January 2026, the ceiling of the 2 per cent rate band increased from €27,382 to €28,700.
The USC is an individualised tax, meaning that a person’s liability to the tax is determined on the basis of a person’s own individual income and personal circumstances. It is a more sustainable charge than those it replaced and is applied at a low rate on a wide base, which ensures that it is a stable and sustainable source of revenue for the State.
The USC yield for 2025 amounted to €5.6 billion, and for 2026, it is projected to total approximately €5.9 billion. Given its significant yield the USC has played a vital role in meeting the many expenditure demands placed on the Exchequer in recent times. Therefore, if the USC were to be significantly amended or abolished it would be necessary to generate this yield from alternative sources.
As the Deputy will appreciate, decisions regarding taxation measures are made in the context of the annual Budget and Finance Bill processes, at the appropriate time, and having regard to the sound management of the public finances.
