Budget 2016 is aimed at improving the tax position for workers and in particular the lower to middle income earners. This is the second stage of a three year plan to reduce the income tax burden.
Key measures include:
- USC rates reduction
- CAT threshold increase
- CGT reduction
The budget should encourage consumer confidence and benefit domestically focused businesses.
However, the marginal rate of income tax for high earning employees still remains comparatively uncompetitive by international standards and does cause concern in attracting foreign employees to Ireland.
- A new Earned Income Tax Credit of €550 will be available to the self-employed and proprietary directors.
- The 0.15% pension levy will be abolished with effect from 31 December 2015.
- The Home Carer's Tax Credit will be increased from €810 to €1,000, with an increase in the carer's income threshold from €5,080 to €7,200.
- There were no changes to the income tax rates or bands.