Impact of Budget 2024 on Personal Tax

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Budget 2024 made changes to tax bands, tax credits, USC and introduced or extended some personal reliefs.

Tax Bands & Tax Credits

There is an increase of €2,000 in the income tax standard rate band cut-off point for all earners in 2023.  The increases are as follows:

  • Single, widowed or surviving civil partner from €40,000 to €42,000;
  • Single, widowed or surviving civil partners, qualifying for the Single Person Child Carer Credit from €44,000 to €46,000;
  • Married couples or civil partners (one income) from €49,000 to €51,000;
  • Married couples or civil partners (two incomes) from €49,000 to €51,000 (with an increase of €33,000 or the second income if lower)
  • The Personal Tax Credit will increase by €100 from €1,775 to €1,875.
  • The Employee Tax Credit will increase by €100 from €1,775 to €1,875.
  • The Earned Income Credit will increase by €100 from €1,775 to €1,875.
  • An increase of €100 in the Home Carer Tax Credit from €1,700 to €1,800.
  • The Sea-going Naval Personnel Tax Credit of €1,500 is extended to 31 December 2024.
Universal Social Charge

The 2.0% band of USC increases by €2,840 to €25,760.

The 4.5% rate is reduced to 4.0%.

*The reduced rate of 2% USC that currently applies to full medical card holders, whose aggregate income does not exceed €60,000, will be extended for two years to the end of 2025.

Rent Tax Credit 

The rent tax credit is being amended to increase the amount that can be claimed from €500 to €750.  One credit may be claimed per person per year, and the credit will be doubled in the case of married couples and civil partners.

As before, the credit will be available to renters who are not already availing of State housing supports.  The proposal relates only to tenancies registered with the Residential Tenancies Board and licences for the use of a room in another person’s principal private residence.

Eligibility for the credit will be extended to parents who pay for their student children’s rental accommodation in the case of Rent a Room accommodation or “digs”.  This change will also apply retrospectively to the years 2022 and 2023.

Mortgage Interest Tax Relief

In light of the current high interest rate environment, a temporary one-year mortgage interest tax relief is being introduced.  The relief will be available to taxpayers in respect of their mortgage on their principal private residence in the State where:

  • the outstanding mortgage balance was between €80,000 and €500,000 on 31 December 2022, and
  • the taxpayer is compliant with Local Property Tax (LPT) requirements.

Mortgage interest tax relief will be available at the standard rate of income tax (20%) in respect of the increase in the interest paid between the calendar year 2022 compared to the calendar year 2023. The maximum value of the relief is €1,250 per property.

To claim the mortgage interest tax relief, the taxpayer must file a tax return with Revenue. The relief will operate by way of a credit offset against the taxpayer’s income tax liability in 2023. It is anticipated that the relief may be claimed in early 2024.

Further detail will be set out in the Finance Bill.

Micro-generation of electricity 

Micro-generation of electricity is the small-scale production of electricity by consumers who generate electricity at their own homes for their own consumption and sell the excess electricity produced.

There will be an increase from €200 to €400 in the exemption from income tax, USC and PRSI for certain profits arising to a qualifying individual who generates energy from renewable, sustainable or alternative energy sources for their own consumption.  The exempted profits are those arising from the domestic generation of electricity which is supplied to the grid.

Information campaign

Revenue estimates that €180 million in refunds could potentially be due to taxpayers for 2022 alone. An extensive public information campaign will be launched by Revenue to raise awareness of the range of tax credits and reliefs available to PAYE taxpayers, to ensure they can avail of their full entitlements and receive any refunds that are due.

National Minimum Wage

As of 1 January 2024, the national minimum wage will increase by €1.40 per hour to €12.70 per hour.

 Return to Budget 2024 Summary 

For further information on any of the above matters, please contact Robert Lohan rlohan@dhkn.ie

This newsletter is intended as a general guide to the subject matter and should not be used as a basis for decisions.  Whilst every effort has been made to ensure the accuracy of the content, no liability can be taken for any omissions or errors.  Professional taxation advice should always be taken prior to proceeding with any transaction giving rise to tax consequences.

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