In a highly anticipated budget reveal, Finance Minister Michael McGrath has introduced a comprehensive package for the upcoming year worth €14 billion. Among the noteworthy announcements are a reduction in the Universal Social Charge, enhancements to the renter’s tax credit, and increased winter energy credits.
Acknowledging the financial strains on many households due to ongoing high inflation, a cost of living package totaling €2.7 billion has been unveiled, complemented by an income tax package valued at €1.3 billion. In a significant move, childcare costs for parents will see a further 25% reduction starting from September 2024.
Key changes in the budget include an increase in the higher rate of income tax to €42,000, as well as a €100 raise in personal employee PAYE and earned income tax credits. The renter’s credit, introduced last year, will see an increase to €750 for 2024.
Additionally, small landlords will benefit from a temporary tax relief scheme, with rental income of €3,000, €4,000, €5,000 to be disregarded at standard rates in 2024, 2025, and 2026-2027 respectively. Mortgage tax relief will be capped at €1,250 for one year.
In other fiscal adjustments, the Universal Social Charge rate will decrease from 4.5% to 4%, and the entry rate into the third point of USC will be raised to €25,760. Households will also receive three energy credits of €150 each for the upcoming winter season.
However, it’s worth noting that Carbon Tax will rise to €56 per tonne, resulting in an additional cost of 2.5 cents for diesel and 2.1 cents for petrol. Moreover, the price of a pack of cigarettes will increase to €16.75 from the current €16. Minister McGrath also announced the introduction of a domestic tax on e-cigarettes in next year’s budget.
The budget announcement is currently underway in the Dáil chamber, with significant implications for households, landlords, and taxpayers across the nation.