Income tax changes to come into affect tomorrow

CHANGES to income tax are due to kick in from tomorrow (January 1) as part of an income tax package worth over €1.3 billion.

The main changes will see an increase of €2,000 in the income tax standard rate band cut-off point, going from  €40,000 to €42,000 for single people, married couples or civil partners from €49,000 to €51,000 for married couples or civil partners with one or two incomes.

The main personal tax credits (Personal, Employee and Earned Income) will also rise by €100 from €1,775 to €1,875. This is worth €813 on the average wage.

The ceiling for the 2 percent rate of USC of €2,840 from €22,920 to €25,760. The increase will ensure a full-time adult worker who benefits from the increase in the hourly minimum wage rate from €11.30 to €12.70 will remain outside the top rates of USC.

The 4.5 percent rate of USC will be reduced to 4.0 percent, with this rate applying to income between €25,761 and €70,044.

An increase of €100 in the Home Carer Tax Credit will also come into effect from tomorrow, bringing it from €1,700 to €1,800.

There will also be a €12 increases in weekly social welfare payments to recipients including pensioners, carers and those with disabilities. A double cost of living payment will also be made on the week commencing January 29, will also benefit 1.3 billion people.

“The aim of this package is to ensure people take home more of their income, pay the higher rate of tax at a later point and that workers earning the minimum wage remain outside the higher rates of USC,” said Mayo TD Alan Dillon, Chairman of the Fine Gael Parliamentary Party.