Dáil Éireann Debate, Tuesday - 7 July 2026
265. Deputy Pádraig O'Sullivan asked the Tánaiste and Minister for Finance the estimated first and full-year costs of indexing personal tax credits, the employee tax credit and the earned income tax credit at a rate of 1%, in tabular form; and if he will make a statement on the matter. [51370/26]
Amharc ar fhreagra268. Deputy Pádraig O'Sullivan asked the Tánaiste and Minister for Finance the estimated first and full-year costs of indexing income tax bands at rates of 1%, 2% and 3%, in tabular form; and if he will make a statement on the matter. [51373/26]
Amharc ar fhreagra269. Deputy Pádraig O'Sullivan asked the Tánaiste and Minister for Finance if consideration has been or is currently being given to indexing income tax bands, and in particular, to the average annual inflation rate; and if he will make a statement on the matter. [51374/26]
Amharc ar fhreagraI propose to take Questions Nos. 265, 268 and 269 together.
The ‘Programme for Government 2025: Securing Ireland’s Future’, contains specific undertakings with regard to personal taxation, it 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".
As the Deputy will be aware, to ease the burden facing average and middle-income earners, over successive Budgets the previous Government substantially increased the entry point to the higher rate of income tax for all earners by €8,700 or c. 25 per cent. The main tax credits have also been increased by €350, or c. 21 per cent. In line with the Government policy of ensuring full-time workers on the minimum wage remain outside the charge to the top rates of USC the ceiling of the 2 per cent USC rate band was increased by €6,898, or 34 per cent, from 2020 to 2025. Budgets 2024 and 2025 also cumulatively reduced the 4.5 per cent rate of USC to 3 per cent.
Broadly, the income tax measures implemented over the period of the last Government are expected to be in line with wage growth.
Furthermore, 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.
Turning to the Deputy’s specific questions regarding individual costings, the Deputy may wish to note that a Post-Budget 2026 Ready Reckoner is available on the Revenue Statistics webpage at: www.revenue.ie/en/corporate/documents/statistics/ready-reckoner.pdf.
The Ready Reckoner shows a wide range of detailed information, including the estimated cost or yield to the Exchequer of increasing the standard tax rate bands and main tax credits. 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.
