Tax changes, social welfare increases and minimum wage rise take effect from Monday

The range of tax changes and higher minimum wage rate announced in October’s budget are to take effect from Monday.

When announcing the changes, Minister for Finance Michael McGrath said that many household budgets were stretched and the measures would see living standards “improve for the vast majority in the coming months”.

In terms of income tax, increases to credits and changes to the bands should see the average worker paying about €800 less. The entry point for the higher 40 per cent rate of tax is increasing by €2,000 to €42,000 for a single person, with proportionate increases for married couples and civil partners.

The ceiling for the 2 per cent Universal Social Charge band increases by €2,840 from €22,920 to €25,760. For those earning between €25,760-€70,044, the 4.5 per cent USC rate will be reduced to 4 per cent.

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A range of tax credits will also increase by €100, including the personal tax credit; the employee tax credit; and the earned income tax credit, which are to rise to €1,875.

The home carer tax credit will increase by €100 to €1,800; the single person child carer credit will rise to €1,750; and the incapacitated child tax credit will increase by €200 to €3,500.

People paying for private rented accommodation will also be able to claim their rent tax credit, which will increase from €500 to €750 a year.

There will also be increased social welfare payments for pensioners, carers, the unemployed, people with disabilities and low-income families.

The maximum rate of all core weekly payments is to increase by €12, with proportionate increases for some, which the Department of Social Protections would benefit some 1.4 million people. .

The Working Family Payment thresholds are to increase by €54 per week for all family sizes. There will also be a €10 rise to the monthly rate of Domiciliary Care Allowance.

Separately, the second of three €150 energy credits will be applied to electricity bills issued after January 1st.

Furthermore, more than 160,000 people in receipt of the national minimum wage will receive a 12 per cent pay rise, with the full rate increasing from €11.30 to €12.70.

The increase, originally recommended by the Low Pay Commission, means someone working a 39-hour week on the minimum wage will receive an additional €55 in basic pay, though those on the rate are more likely to work part-time or atypical hours, meaning the actual impact may vary significantly.

Those aged 17, 18 and 19 years old currently receive 70, 80 and 90 per cent of the full rate, respectively. From Monday, therefore, the rate for a 17-year-old will increase from €7.91 per hour to €8.89, with 18-year-olds receiving €10.16 per hour and 19-year-olds €11.43.

Entitlements to sick pay will, for most employees, also change on Monday, increasing from three days to five.

Under the terms of the Sick Leave Act 2022, employees are entitled to 70 per cent of their regular wage for days missed through illness up to a maximum of €110 per day. The staff must have 13 weeks continuous service and are required to provide medical certificates.

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