Finance minister Paschal Donohoe has widened tax bands and increased tax credits with effect from 1 January 2022.

Presenting Budget 2022, the minister announced an increase in the standard rate band by €1,500 and an increase for the personal tax credit, employee tax credit and earned income credit by €50. The bands increases are as follow:

• Single, widowed or surviving civil partner from €35,300 to €36,800.
• Single, widowed or surviving civil partners, qualifying for the Single Person Child Carer Credit
from €39,300 to €40,800.
• Married couples or civil partners (one income) from €44,300 to €45,800.
• Married couples or civil partners (two incomes) from €44,300 to €45,800

The tax credfit changes are as follows:

• An increase of €50 in the Personal Tax Credit from €1,650 to €1,700.
• An increase of €50 in the Employee Tax Credit from €1,650 to €1,700.
• An increase of €50 in the Earned Income Credit from €1,650 to €1,700.

In Association with

Donohoe estimates the 'tax cost'of the changes at c.€520m in 2022. For higher rate taxpayers, the additional net income is c.€35 per month or €415 p.a.

USC

The ceiling for the 2% rate of USC will be increased by €608 from €20,687 to €21,295 from January 2022

The minister said the increase will ensure that a full-time adult worker who benefits from
the increase in the hourly minimum wage rate from €10.20 to €10.50 will remain outside the top rates
of USC.

The USC Rates & Bands from 1 January 2022 will be:
• Incomes of €13,000 are exempt. Otherwise:
• €0 – €12,012 @ 0.5%
• €12,013 – €21,295 @ 2%
• €21,296 – €70,044 @ 4.5%
• €70,045+ @ 8%
• Self-employed income over €100,000: 3% surcharge.

The reduced rate of USC for medical card holders is being extended for a further year.

Photo: Ministers Paschal Donohoe (right) and Michael McGrath. (Pic: Sasko Lazarov / RollingNews.ie)