Modest Income Tax and USC improvements

Oct 13, 2020
The Programme for Government stated that there would be no change to income tax credits or bands in Budget 2021. However, the Minister made some modest adjustments in favour of the income taxpayer.  The ceiling of the 2 percent USC rate band will increase from €20,484 to €20,687 - a move which will ensure that a fulltime worker will remain outside the 4.5 percent USC rate when the hourly minimum wage rate increases from €10.10 to €10.20 in January 2021.  An increase in the Earned Income Credit from €1,500 to €1,650 now equalises the self-employed tax credits with PAYE workers but the 3 percent USC surcharge remains a burden on the self-employed.   From 1 January 2021 the weekly income threshold for the Employer PRSI higher rate of 11.05 percent will increase from €394 to €398. The Dependent Relative Credit increased from €70 to €245.