Tánaiste Leo Varadkar has vowed that almost all workers will benefit from Budget 2023, due to be announced on September 27th.

The introduction of a 30% tax rate for middle-income earners would leave them between €42 and €83 a month better off, under Budget plans being examined by the Government.

The measure is under consideration in a "cost of living" Budget package in the autumn, but Finance Minister Paschal Donohoe warned yesterday that Government cannot fully protect people from rising inflation.

The Department of Finance launched the Tax Strategy Group papers yesterday, outlining the different options available to the Government for Budget Day.

The papers outline the possibility of introducing a 30% tax rate for middle-income earners, an idea that has been repeatedly floated by Tánaiste Leo Varadkar.

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Mr Varadkar vowed yesterday that "almost all workers" will benefit from an income tax reduction package next month.

He said the Budget would provide "a substantial income tax package that will reduce income tax for low-income workers, for middle-income workers and higher income workers".

"[There will be] a particular emphasis on middle-income workers," he said. "The exact detail as to how that's achieved has to be worked out between now and Budget Day."

There were two proposals for the middle-rate tax that would benefit one million taxpayers.

This included taxing earnings between €36,800 and €41,000 at 30%, which would cost the State €525million for a full year.

Single individuals and married one-earner couples would benefit to the tune of €500 per annum, or €42 per month.

Option two is taxing earnings between €36,800 and €46,800 at 30%, at a cost of €945m for a full year. Single individuals and married one-earner couples would be €1,000 a year better off. This amounts to €83 a month.

However, the Tax Strategy Group cautioned that a new tax rate would "necessitate big alterations to Revenue's systems". It also warned that it could affect some people's benefits, such as tax relief for employee pension contributions and health expenses relief for nursing home charges, due to the fact that they would be paying lesser tax.

Additional proposals on the table include indexing or partially indexing tax bands to ensure people are no worse off due to inflation.

Separately, another tax strategy paper looked at potential changes to social welfare rates.

One proposal suggested linking weekly payments to inflation, which was 8.3% in May. This would cost €1.424bn.

Other proposals included a €15 weekly rate increase for all social welfare payments, at a cost of €1.1bn.

Minister Donohoe stressed yesterday that all these were just "options" and not decisions.