The 2024 Budget Day was Tuesday, the 10th of October 2023
Minister for Finance Michael McGrath and Minister for Public Expenditure Paschal Donohoe began outlining the full Budget in a Dáil speech from 1pm.
Our qualified Tax Experts here at Irish Tax Rebates will be comprehensively reviewing the 2024 Budget announcements and their implications for our clients.
The total cost of the Budget 2024 is €6.4 billion, with taxation measures worth €1.1 billion of the total.
While many important new measures are being announced, we will be focusing on the updates that affect you all as PAYE earners, and how you can make the most out of the Budget 2024.
So, what does the Budget 2024 mean for me? Let’s dive in…
Budget 2024 Highlights for PAYE Earners
- The standard rate of income tax cut off point for the 40% tax band is to be increased, bringing the entry point from €40,000 to €42,000.
- The Rent Relief Tax Credit will increase from €500 to €750 for single taxpayers and €1250 to €1,500 for married couples.
- The upper rate of the second USC band is to be increased from €22,920 to €25,760.
- There will be the first reduction in USC rates in 5 years, with the 3rd band rate reducing from 4.5% to 4%.
- A one year 20% mortgage interest tax break relief will be given due to the increased interest paid on mortgages between 2022-2023.
- The Help-to-Buy-Scheme will be extended till the end of 2025.
- €100 increases in the Employee Tax Credit, the Personal Tax Credit.
- €100 increase in the Home Carer Credit.
- €200 increase in the Incapacitated Child Carer Credit.
Income Tax
The Budget has announcement a change to the income tax band rates, with an increase in the standard rate income tax cut-off point by €2000.
From January, there will be a widening of rate bands for the 40% top rate of income tax by €2,000, changing from €40,000 to €42,000. This will mean an extra €400 in tax savings for people paying the 40% tax rate.
Universal Social Charge (USC)
USC is a tax payable on your total income. Depending on your circumstances, you pay USC at the standard rate or the reduced rate.
Among the 2024 Budget announcements, the 4.5% USC rate will be reduced to 4%, meaning there will be tax savings for those earning over €36,000 by €122. There will also be an increase in the second USC band rate from €22,920 to €25,760.
So from January, USC will be calculated as:
- Income up to €12,012 will pay USC at a 0.5% rate
- Income from €12,013 – €25,760 will pay USC at a 2% rate
- Income from €25,760 – €70,044 will pay USC at 4%
- Income over €70,045 will be taxed for USC at a rate of 8%
- And those self-employed earning over €100,000 will be hit with a 3% surcharge
There will also be an extension on the USC concession for a further 2 years.
This is the first reduction in USC rates in 5 years.
Personal Tax Credit
Also announced in the budget are changes to personal tax credits. An increase of €100 on the Employee PAYE credits from €1,775 to €1,875 will allow for a tax saving of €200.
Home Carer Tax Credit
There will also be an increase in the Home Carer Tax Credit from €1,700 to €1,800 that will result in a tax saving of €100.
Incapacitated Child Tax Credit
The incapacitated child tax credit is also being increased from €3,300 to €3,500, resulting in another tax saving of €200.
Rent Tax Relief
The Rent Tax Credit for private tenants who are not in receipt of other state housing supports will be increased from €500 for a single person to €750, and €1,500 for married couples who are renting. This will mean many renters will experience further tax savings of €250 or €500 in 2024.
Parents with students in education could always claim the rent tax relief, but now, the 2024 announcement will allow for student children who have tenancies in ‘Rent a Room’ or ‘digs’ accommodation to claim the Rent Tax Credit for 2022/2023.
The Rent Tax Credit was reintroduced into the 2023 Budget and will be applicable for the years 2022-2025. The 2023 credit will be available to claim in early 2024.
Mortgage
The Irish Government has secured plans for tax relief for homeowners who have been hit hard by European Central Bank (ECB) interest rate hikes as a result of record levels of inflation.
2024 will see the introduction of this one year Mortgage Interest Tax break, a 20% relief on the increased amount of interest paid on their mortgage between 2022-2023.
In monetary terms, this will mean a tax break worth up to €1,250 per property for more than 165,000 homeowners with tracker and variable mortgages.
Help- To-Buy-Scheme
The Help-to-Buy Scheme has been extended until the end of 2025 and will be revised later in 2024.
In addition to this update, the Local Authority Affordable Purchase Scheme will now be able to avail of the scheme from the 11th of October 2023 and be eligible up to the end of the scheme in 2025.
The Help-to-Buy scheme was initially introduced in 2017 to offer first-time buyers an income tax rebate of 5% of the purchase value of a newly built home priced up to €400,000, translating to a tax rebate of up to €20,000. First-time buyers who purchase homes costing between €400,000 and €600,000 qualify for a rebate capped at €20,000. Homes priced over €600,000 are not eligible for a tax rebate scheme.
Extra Budget Updates…
Energy Tax Credit
There will be three Energy tax Credits introduced, each worth €150. These credits will be paid out in three instalments between the end of this year and April of next year.
Tuition Fees
For the academic year of 2023/2024, there will be a once-off reduction of the student contribution fee by €1,000.
Not only that, there will also be a once-off reduction of approximately 33% in the contribution fee for apprentices in higher education and an increase in the Postgraduate tuition fee contribution by €1,000 for student grant recipients.
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