Accounting Pro

Budget 2021: Main Changes in Taxation

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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