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Increase in standard income tax band welcome development

Budget 2023

There are now more people in employment than ever before, a rapid recovery from where we were two years ago as businesses grappled with public health restrictions on their activities. However, with increased cost of living pressures we are more focussed than ever on our net take-home pay. The announcement from the Minister on income tax bands, rates and credits will be a welcome development for many taxpayers.

Commenting on the announcements, Ian Prenty, Tax Partner, Deloitte commented:

The announcement from the Minister on the increase to the standard income tax band and the increase in the second USC rate band reflects the commitments made in the Programme for Government. Changing the top tax rate to apply to income above €40,000 rather than €36,800 could put up to €640 back in the pocket of a single person and €1,280 for a two-income household.

Prenty concluded:

The move to increase the standard income tax band will be a welcome development for many and is reflective of the comments made in the Summer Economic Statement that guarding against higher taxation on workers is to be a priority. While Ireland has one of the most progressive income tax systems in the developed world, policy makers need to be mindful of the negative impact which higher marginal rates of tax can have on business growth and economic development, and particularly on the need to guard against workers moving into higher tax brackets due purely to rising gross incomes as a result of inflationary pressures.