Budget 2023 Ireland: €50,000 workers save €500 under budget plans to widen top tax margins

Workers will save at least €500 per year on average as Budget plans to widen income bands for the top tax rate.

Treasury Secretary Paschal Donohoe will increase the 40 percent income tax band by €2,500, meaning workers earning less than €39,300 will not have to pay the higher tax rate.

The move will result in significant savings for taxpayers – with a single person earning €50,000 taking home at least an additional €500 a year under the plan agreed by the coalition parties.

Changes in tax credits are also expected to put more money in workers’ pockets in addition to changes in income tax brackets.

Meanwhile, negotiations are underway to introduce a new tenant tax credit and a reduction in landlord tax on rental income.

Organizations representing property owners have called for the rental tax rate to be reduced from 50 percent to 25 percent to prevent landlords from exiting the rental market.

The €2,500 increase in the income tax margin would be the highest in more than a decade and goes some way towards delivering on Fine Gael’s promise to create the entry point for the higher €50,000 tax rate.

In last year’s budget, Mr. Donohoe increased the income band for the 40 percent rate by €1,500.

According to plans being finalized by the government, a tax rate of 20% will be applied to all income below €39,300.

However, the budget signals bad news for Tánaiste Leo Varadkar’s proposal to introduce a third income tax bracket at a rate of 30 percent.

The government has more than 1 billion euros available for next Tuesday’s budget tax cuts

Mr Varadkar has continued to publicly insist his idea is still under study, but senior government sources say they will not be included in this budget.

According to a recent report by the Government Tax Strategy Group, 1.9 million taxpayers would benefit from a €2,200 increase in tax margins for the higher rate and a €75 increase in tax credits.

The government has more than €1 billion in budget tax cuts next Tuesday, but this must cover the cost of extending tax cuts introduced during the year in response to the cost-of-living crisis sparked by Russia’s invasion of Ukraine became.

That includes extending excise duty cuts on petrol and diesel in the coming months, but motor fuel cuts are unlikely to be maintained indefinitely.

The excise duty on petrol was reduced by 15 cents and on diesel by 10 cents.

The government is also examining how to offset upcoming hikes in carbon taxes due to come into effect on October 12, which will also lead to a rise in petrol and diesel prices.

Senior Fine Gael’s figures are keen to delay or offset the tax, which will increase the price of a 60-litre diesel tank by €1.48 and a similar petrol tank by €1.28.

Increases in the carbon tax on home heating oil do not come into effect until May each year, and there is a government proposal to do the same with the fuel tax.

Separately, high-level budget talks are ongoing about how to support companies facing financial pressure from the energy crisis.

Senior officials are attempting to design a program to support businesses most in need of government support due to rising electricity costs.

However, it is difficult to develop a system that is exclusively aimed at companies.

https://www.independent.ie/business/budget/budget-2023-workers-on-50000-to-save-500-under-plans-to-expand-highest-tax-bands-42005751.html Budget 2023 Ireland: €50,000 workers save €500 under budget plans to widen top tax margins

Fry Electronics Team

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