Congratulations. You’ve reached week 52 of January 2026. It really can feel like the longest month where finances are concerned. December’s spend has probably made a dent in this month’s money, credit card bills have mounted, heating bills have landed and pay-day simply can’t come soon enough.
For many, the January blues have been further heightened by ongoing confusion over an important and highly vulnerable part of their home life – the role of carer.
Whether full- or part-time, letters sent by Revenue to some 34,600 people around changes relating to carer’s allowance and carer’s benefit have cast even more of a cloud over the start of 2026.
The issue arises out of changes from January 1st, where the Department of Social Protection is now charged with providing Revenue with details of people receiving carer’s allowance and carer’s benefit, both of which can be taxable depending on your overall income.
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Any tax liabilities will henceforth be collected in real time rather than at the end of the year. But, and this is one of the reasons the change is causing so much panic and anxiety for some carers, many did not know the payment was taxable in the first place.
More than 1,900 people have contacted a dedicated support line seeking clarity on whether they might face a retrospective tax bill. It’s a difficult place to be for a person who feels they are being targeted over a payment they may have fought tooth and nail to secure in the first place to help care for a loved one, a family friend or an elderly neighbour.
While the Minister for Social Protection, Dara Calleary, estimated that less than 10 per cent of the 104,000 people who receive the benefit or allowance will owe money to Revenue, it is still a genuine worry for people at a time where the cost-of-living crisis continues. Reassurances such as “the majority of that [tax liability] will be less than €1,000” and “we don’t want people to be concerned” are unlikely to be much comfort for people whose individual circumstances are already severely impacted by economic pressures.
A thousand euro is still a lot of money, especially for people who may be paying exorbitant rents, medical bills and energy bills and budgeting to put food on the table. In the Dáil this week, Sinn Féin leader Mary Lou McDonald said confusion over the tax situation governing carers had left many in shock and distress.
“Carers are not tax dodgers. They are people who care for others and who save the State a fortune,” she said. “Some of them may work part-time just to make sure they can make ends meet because carers experience the cost-of-living crisis just like everyone else. Now, out of the blue, they get this letter from Revenue stating they may in fact have a liability and a bill.”
Minimum Wage
But this month also brings some good news – increases in a number of payments announced as part of Budget 2026. These include a €10 increase in weekly payments to pensioners, carers and people with disabilities. Weekly rates of the child support payment have also increased by €16 to €78 for children aged 12 and over, and by €8 to €58 for under 12s.
The working family payment thresholds have also increased by €60 per week as an additional financial support for low-income families. This increase applies to all family sizes. The fuel allowance is now €38 per week, having increased by €5 since the beginning of the month. Over the course of the year, this adds up to an extra €260 towards heating costs.
Where work and wages are concerned, the national minimum wage has increased by 65 cent this year, bringing it to €14.15 per hour. Changes to the Universal Social Charge (USC) have also come into effect to mirror that increase. The 2 per cent USC rate band limit increased to €28,700, up from €27,382. This means people working full-time on the minimum wage increase won’t have to pay USC at the higher 3 per cent rate.
The rent tax credit will continue this year and has been extended until the end of 2028, with a credit of up to €1,000 available for an individual, and up to €2,000 for a couple who are jointly assessed. But you do need to actively claim it; it doesn’t just happen.
And it will be of little comfort to tenants facing another year of uncertainty over finding affordable accommodation if they have already been served notice to leave their rental home of years on the back of the new rental rules coming into effect in March.
Other measures
Later in the year, we can expect more budget measures to take effect, including the highly sought-after drop in VAT on food across the hospitality industry.
Measures that kick in before that include, in April, an increase in the base rate of the Wage Subsidy Scheme for people with disabilities by €1.20 per hour to €7.50. A middle rate of €8.50 will also be introduced. Employers outside the public sector can get the subsidy for direct employees only; it cannot be given to third parties such as employment agencies or payroll services.
One unwelcome change is the carbon tax increase on petrol and diesel introduced last October, which will apply to other fuels from May 1st. The increase, to €71 per tonne of carbon dioxide emitted, is up from €63.50.
Changes in July include that reduction of the VAT rate on food, catering and hairdressing services, to 9 per cent from 13.5 per cent.
Also that month, the weekly carer’s allowance income disregard will rise to €1,000 for a single person, up from €625, and €2,000 for a couple, up from €1,250. The weekly income limit for carer’s benefit will also increase to €1,000.
Finally, if you are an employee, you should file a tax return for last year. It’s something that people in the Pay As You Earn (PAYE) system don’t pay enough heed to, believing that their employer has handled all tax obligations and duties.
There are myriad expenses you can claim – from visits to your GP, medical prescriptions, the renter’s or mortgage interest tax credit depending on your circumstances, college fees and non-routine dental expenses.
For the most part, 20 per cent can be claimed back on health, dental and physiotherapy expenses. There is also remote working relief on expenses such as electricity and broadband costs.
You can claim as far back as four years but if you don’t go looking for it, you won’t get it. It is money to which you are entitled and, with many families still feeling the financial squeeze, every little helps. But if you miss that four-year deadline, it will be gone for good.
You can contact us at OnTheMoney@irishtimes.com with personal finance questions you would like to see us address. If you missed last week’s newsletter, you can read it here.
