The 2027 Budget is set to deliver an increase in minimum wage and a higher threshold for those in the 40% tax bracket.
How will the higher tax rate threshold affect households?
With the higher 40% rate of tax threshold set to rise by from €44,000 to €46,500, households in Ireland can expect an ease in expenses in 2027.
Elaine Doyle, professor of taxation at the University of Limerick, explained what this means for taxpayers. “On increase, in the standard rate band for income tax means that taxpayers will be taxed at 20% on more of their money before they move into the 40% tax bracket’’
Prof. Doyle noted that the standard rate band rises for a single person by €2,000. This means €2,000 of their income will be taxed at 20% rather than the 40% rate, which represents a saving of €400 in tax.
‘’A tax credit is worth the same amount to everyone paying tax, so increasing tax credits is perceived to be fairer for those on lower incomes,’’ she explained.
This change does not affect someone on a low level of income who only pays tax at 20% in the standard rate band. It is only taxpayers paying at a higher rate that will benefit.
Meanwhile, students working part-time jobs can look forward to an increase in minimum wages in the upcoming year.
The minimum wage is set to increase by 5.6% from €14.15 to €14.94.
Third-level students with part-time jobs are set to earn 79c more than an hour which will help alleviate the rise in cost-of-living.
‘’I think it’ll be good, I think it’ll be beneficial to a lot of people,’’ Nanette Oiboh, final year Business student at the University of Limerick, commented.
Oiboh has been commuting from Co Laois every day for her last four years on campus, meaning her transport costs are significantly higher than those living locally.
Thomas Byrne, a final year Math and Physics student, believes there should have been mor of an increase in the minimum wage.
‘’It should be raised a bit more,’’ he said ‘’It should be in line with living.’’
The increase applies to all workers over the age of 18 in Ireland.
The official 2027 Budget announcement is set to take place at 1pm today.