Personal tax (Budget 2020)

Oct 08, 2019

No across-the-board personal tax cuts (“the unfunded tax cut of today is the unwelcome tax increase of tomorrow”).  The average employee will not see any difference in their pay packet from 1 January next.  Two tax-reducing measures were announced; increases in both the home carer credit and the earned income credit.  The income tax reliefs under the SARP and FED will be extended for three years.  A first in a long time: we have no changes, up or down, to the USC rates or thresholds, just an extension of the rate for medical card holders.  

Tax rates and bands

No changes to the standard rate of tax 20% or the higher rate of 40%.  No changes to the tax rate bands. 

Home carer creditincrease of €100 so that the maximum credit available will be €1,600.

Earned income creditincrease of €150 bringing the credit up to €1,500.  This still falls short of the PAYE credit of €1,650 but is a move in the right direction to reduce the inequity, long in the tax system, resulting in people in employment having lower tax bills than people with similar earnings who are self-employed.  These combined increases will cost €27 million in 2020 and €43 million in a full year. 

USC

The only change announced is the extension of the reduced rate of USC for medical card holders to the end of 2020.  Nothing else! 

Special Assignee Relief Programme (SARP) and Foreign Earnings Deduction (FED)

Both the SARP and the FED are to be extended by three years until 2022.  The SARP is an income tax relief measure for foreign executives who come to work in Ireland.  The FED is an income tax relief for Irish employees who go to work abroad in certain qualifying countries.