More than one million workers paying higher rate of income tax

More than one million people in the State are paying the higher rate of income tax, according to figures from Revenue.

Pre-budget statistics from the tax collection agency show that 1.07 million workers, nearly one third of all taxpayers, are paying the higher 40 per cent rate on some of their incomes having passed the cut off for the standard 20 per cent rate.

Negotiations within Government are expected to ramp up over the next two weeks on the tax and spending package that will be announced in Budget 2024, which will be set out on October 10th.

Fine Gael and Fianna Fáil politicians are believed to be pushing for a package that would include an increase in tax bands, as well as cuts to the universal social charge (USC).

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The Government increased the point at which workers start to pay the higher rate on their incomes from €36,800 to €40,000 for single people, with similar increases for married couples.

One source said a further increase of between €1,000 and €1,500 in tax bands before people paid the higher rate was on the table in current talks.

Potential USC cut

“Another change to the bands and credits will make up the bulk of the tax package, and then it is a matter of looking at what is left there and how this could potentially fund cuts to the USC,” the source said.

Other measures under consideration include further energy credits worth either €100 or €150, a weekly rise in welfare rates of between €10 and €12, and a reduction in public transport costs.

The Government is also weighing up tax relief on landlords’ earnings, in an attempt to stem the tide of property owners leaving the rental market.

Minister for Children Roderic O’Gorman has publicly committed to pushing for an increase in the allowance paid to foster carers.

Carbon tax is expected to increase from €48.50 to €56.00 per tonne from October for petrol and diesel, with home heating fuels likely to follow suit from May.