The Irish Government has announced the Budget 2021, we have listed out the overview of the main changes in taxation area as below:
- Minimum Wage Rate: Increase from €10.10 to €10.20 per hour.
- Income tax
Standard or higher rate income tax bands: no changes are made.
Earned Income Tax Credit: Increase from €1,500 to €1,650.
This will also be applied for the 2020 tax year.
Dependent Relative Tax Credit: Increase from €70 to €245.
- Universal Social Charge (USC)
2% band: Increase from €20,484 to €20,687. The salary of full-time workers on the minimum wage will remain outside the higher rates of USC.
The USC Rates & Bands from 1 January 2021:
| €0 – €12,012 | 0.5% |
| €12,012 – €20,687 | 2% |
| €20,687 – €70,044 | 4.5% |
| €70,044+ | 8% |
Employer’s PRSI: The weekly income threshold for the higher rate of employer’s PRSI will increase from €394 to €398.
Medical card holders will continue to pay a reduced rate of USC until the end of December 2021.
- Excise duties
From midnight on 13 October 2020, the excise duty on a packet of 20 cigarettes will increase by 50 cent and with a pro-rata increase on other tobacco products.
- Carbon tax
The carbon tax on fuel will increase from €26 to €33.50 per tonne. The will apply to auto fuels from midnight on 13 October 2020 and to solid fuels from May 2021.
- Debt warehousing for self-assessed taxpayers
The tax debt warehousing scheme will be extended to taxpayers who are self-assessed for income tax that is nagetively impacted by the pandemic Covid-19. Taxpayers who are unable to pay their tax liability balance for 2019 and preliminary tax for 2020 can defer payment for 12 months at 0% interest rate.
- VAT rate
There is a temporary reduction of VAT for Tourism and Hospitality items from 13.5% to 9% from 1 November 2020.
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