Minister confirms €1.3 billion income tax package and other measures to support businesses will come into effect on 1 January

changes to main tax credit, USC rates and Standard Rate Cut-off point will help 2 million income tax payers
Rent Tax Credit increased to €750 from 1 January
enhancements to Research & Development tax credit, Employment Investment Incentive, Start-up Capital Incentive and Start-Up Relief for Entrepreneurs (SURE) schemes come in to effect

The Minister for Finance Michael McGrath has confirmed that a personal tax package worth €1.3 billion in 2024 announced in last October’s Budget will come into effect tomorrow, 1 January 2024, and will benefit over 2 million income tax payers.

Speaking today on New Year’s Eve, Minister McGrath said:

“Budget 2024 included a €1.3 billion income tax package, which will ensure that over 2 million income taxpayers will see an increase in their net take home income in the coming year.

"From tomorrow, 1 January 2024, the main tax credits (personal, employee and earned income) will all increase by €100 from €1,775 to €1,875. There are also increases to the Home Carer Tax Credit, Single Person Child Carer Tax Credit and Incapacitated Child Tax Credit.

"The Standard Rate Cut-Off Point will increase by €2,000 from €40,000 to €42,000 for single persons, with commensurate increases for married couples and civil partners.

"The first USC rate cut in 5 years will see the 4.5% rate reduced to 4%, and in line with the increase in the National Minimum Wage to €12.70 also taking effect from 1 January, the second USC rate band (2 per cent rate) will increase to €25,760. This will ensure that full-time workers earning the national minimum wage will remain outside the top rates of USC.

"A single person earning the average annual salary of €47,000 can expect to see an increase in take home pay of €780 in 2024 a result of the income tax measures coming in to effect. A couple earning €100,000 between them will see an increase in take home pay of €1,560 in 2024.

"When combined with other Budget measures including targeted mortgage interest relief, an extension of the reduction in VAT on electricity and gas, additional energy credits and social protection changes, this represents a comprehensive response on the part of Government to the cost of living challenges faced by households.

"As part of Budget 2024, I was also pleased to be able to further enhance the Rent Tax Credit for 2024, increasing the maximum level by 50% to €750 and I strongly urge all eligible taxpayers to register for the credit using the Revenue MyAccount for 2022 and 2023. It will also possible to claim the credit in realtime for 2024 early in the New Year.”

Minister McGrath also highlighted a number of enterprise tax measures which are coming in to effect:

"A key theme of Budget 2024 was to enhance a number of tax incentives for enterprise in Ireland. A number of these come in to effect from 1 January including enhancements to the Employment Investment Incentive (EII), Start-up Capital Incentive (SCI) and Start-Up Relief for Entrepreneurs (SURE) schemes.

"The Research and Development tax credit also increases to 30% in respect of 2024 expenditure which will help businesses of all sizes to invest in their future productivity.”

Notes

The following tax measures come in to effect on 1 January:

reduction of the 4.5% USC rate to 4% and extension of the reduced rate of USC concession for medical card holders to 31/12/2025
increase of €2,000 in income tax standard rate cut-off point to €42,000
increase of €100 in the Personal Tax Credit to €1,875
increase of €100 in the Employee Tax Credit to €1,875
increase of €100 in the Earned Income Credit to €1,875
increase of €100 in the Home Carer Tax Credit to €1,800
increase of €100 in the Single Person Child Carer Tax Credit to €1,750
increase of €200 in the Incapacitated Child Tax Credit to €3,500
increase in the 2% USC rate band ceiling by €2,840 to €25,761
increase of the exemption from income tax, USC and PRSI for certain profits arising to an individual who generates energy from renewable, sustainable or alternative energy sources for their own consumption and sell the excess energy produced, from €200 to €400

Other measures that come in to effect are:

the transposition of the EU Directive on ensuring a global minimum level of taxation for large groups at 15%, including the Irish domestic top-up tax, effective for fiscal years starting on or after 31 December 2023
the Research and Development (R&D) tax credit provides a 25% tax credit for qualifying R&D expenditure. The rate is being increased from 25% to 30% in respect of 2024 expenditure, for which claims will be filed in 2025. The first year payment threshold allows for a claim up to the threshold amount to be paid in full in year 1, rather than over three years. The current threshold of €25,000 is being increased to €50,000
the total annual capped fund of €5 million available for the Charities VAT Compensation Scheme will double to €10 million for 2024. Charities will avail of this increased cap for claims submitted in 2024 with regards to the expenses incurred in 2023
Finance Act 2022 introduced Section 897C of the Taxes Consolidation Act 1997 (TCA) which, from 1 January 2024, will require employers to report details of certain expenses and benefits made without the deduction of tax to employees and directors. The items that come within the scope of the new reporting regime are the small benefit exemption, the remote daily working allowance of €3.20 and travel and subsistence payments. Revenue intend to bring Regulations shortly to prescribe the form and other particulars of the reporting requirements
a new Angel investor relief for Capital Gains Tax (CGT) will provide a reduced rate of CGT for qualifying investment in innovative start-ups, for gains up to twice the value of their investment subject to certain limits. It is expected that this will be commenced in 2024 once arrangements for certification process finalised in Revenue and Enterprise Ireland
an increase in cap on qualifying expenditure from €75 million to €125 million for the Film Tax Credit is subject to State Aid approval