The government will change tax bands for middle-income workers as part of this year's Budget, public expenditure minister Michael McGrath has indicated.

While Fine Gael politicians have repeatedly spoken about changing tax brackets or introducing a new tax rate for the so-called 'squeezed middle', it is the firmest pledge from the Fianna Fáil minister that changes will be made this year.

The Programme for Government commits to "preventing an increase in the real burden of income tax, to prevent more low-income workers being taken into the tax net and to ensure there is no increase in the number of people having to pay higher income tax and USC rates".

Responding to questions in the Dáil on Wednesday, minister McGrath confirmed that the Summer Economic Statement will be unveiled next week, which lays how much money the government will spend during the Budget in October.

He said that the Budget will focus on the cost of living, with measures to address childcare, transport, education and health.

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The minister noted that while there will be "a need for a significant welfare package", measures will also be taken to ensure those who receive pay increases do not have to pay more tax.

"It is important that it always pays to work," the minister stated.

"The overwhelming majority of people who want to work, the evidence is that they are. We have an unemployment rate below 5% at the moment."

He added: "That is why it is important we have a tax package in the Budget. We have a Programme for Government commitment that we will honour."