Budget 2022 simplified! What you need to know about the tax breaks for Irish workers

Returning to normal after the COVID-19 pandemic – that was the key theme of today's Budget 2022 announcement.

The €4.7bn Budget package – which was delivered today by Minister for Finance Paschal Donohoe and Minister for Public Expenditure and Reform Michael McGrath – includes a number of measures to support workers, social welfare recipients, the healthcare system and more.

Key inclusions in today's announcement include, increases in standard tax-rate bands and enhanced incentives for remote workers.

But what does today's announcement mean for you? To find out, check out our complete guide to Budget 2022 below.

How does Budget 2022 affect your pocket? Try our FREE calculator to find out!

Tax-rate band increases

The Budget 2022 package includes approximate €520m in tax cuts.

This money has been accredited to changes to income tax bands that will enable two-thirds of workers to take home more of their pay.

In short, the government has increased all standard tax-rate bands by €1,500.

The PAYE Tax Credit, Personal Tax Credit and Earned Income Tax Credit have all been increased by €50 also.

Working from home

Half a million employees in Ireland will be eligible to benefit from enhanced tax reliefs.

The announced measures allow remote workers to claim back up to 30% of household electricity and heating bills for the days they work from home.

Previously, workers could only claim 10% of these costs.

Learn more about claiming this tax relief here.

USC

The minimum wage is to rise by 30c to €10.50.

What's more, Mr Donohoe also announced that the ceiling of the second Universal Social Charge rate band will be increased from €20,687 to €21,295. This will ensure that full-time minimum wage earners will remain outside the top rates of the USC.

The USC exemption will also apply to all medical cardholders and over-70s that earn less than €60,000.

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Corporation tax

Mr Donohoe also confirmed that Ireland has joined the international agreement on a minimum corporate tax rate.

While the 12.5% tax rate will not change for most companies, a new rate of 15% will apply to organisations with revenues above €750m.

SMEs

The government have also announced an extension of corporation tax relief to 2026 for many start-up companies.

Organisations can now also benefit from the relief for up to five years (increased from three years).

Carbon tax and climate

"The world is burning," said Mr Donohoe. "And the only chance we have to control those fires is through coherent and effective policies. This is why carbon taxation is so important."

With this in mind, the government is implementing annual carbon tax increments of €7.50 until 2030.

Housing and property

The Minister acknowledged the strain, anxiety and worry being caused by the shortage of homes.

"This is why the Government is determined to build more homes," says Mr Donohoe.

As a result the government are introducing a zoned land tax the purpose of which will be to "encourage the use of land for building homes".

The tax will target land which has previously been zoned for residential use, but has not yet been developed for housing.

Finally, the Help to Buy scheme will extend through 2022 and landlords can continue to claim tax relief on pre-letting expenses for three additional years.

The average Irish tax refund is €1,880

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Youth Travel Card

Meanwhile, Minister McGrath shared specifics of Ireland's expenditure plans. This included details of a new Youth Travel Card.

The government has set aside €25m for the card which "will be available to any person between the ages of 19 and 23 and will allow them to avail of a 50% discount on fares across the transport network", said McGrath.

Overall, more than €1.4bn has been allocated to develop Ireland's public transport infrastructure.

This includes investment projects such as BusConnects, MetroLink and the DART+.

Social Welfare

The Budget package also includes €558m of social welfare increases.

This expenditure includes a number of key increases, including:

• An additional €5 weekly for working age recipients with proportionate increases for qualified adults and those on reduced rates of payment
• An increase in the old-age pension by €5. Meanwhile, the living alone allowance will increase by €3
• The Back to School Clothing and Footwear Allowance will increase by €10
• The weekly rate of fuel allowance will also increase by €5. This will be introduced from midnight tonight
• Finally, a 100% Christmas Bonus for social welfare was also announced

Carer's Allowance

The Domiciliary Care Allowance which had been paid for children in hospital for three months, has now been extended to six months.

Meanwhile, the income disregard for Carer's Allowance has increased from €332.50 to €350 for a single person and from €665 to €750 for a couple. The capital disregard for Carer's Allowance will be increased to €50,000 (from €20,000).

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Health

Mr McGrath also announced a number of healthcare measures including:

• 7,000 new posts will also be added across the health system, with plans to recruit a further 8,000 staff next year
• An additional €37m for the expansion of mental health services
• An additional €105m for disability services
• €31m has been set aside for a dedicated women's health package which includes access to free contraception for women aged 17-25

Education

The government is allocating €9.2bn to the Department of Education in 2022.

The expenditure will include the hiring of 980 additional teachers, 1,165 additional SNAs and the provision of over 30,000 school places.

There will also be an additional investment of €30m for the school transport scheme.

What's more...

• There will also be an increase in the number of schools and children benefiting from the DEIS programme
• The maintenance grant will be increased by €200 – a move from which 60,000 students can potentially benefit
• The removal of the €200 contribution fee for post-Leaving Certificate courses

Gaming tax credit

Mr Donohoe announced that a tax credit for the digital gaming sector (which was announced during last year's budget) will soon be introduced.

Digital games development companies will be entitled to claim a refundable corporation tax credit for expenditure incurred on the design, production and testing of a game.

The credit will be available at a rate of 32% (with a limit of €25m) on eligible expenditure.

Garda

Funding for 800 extra Gardaí has been provided for in Budget 2022.

In total, €145m has been set aside for the Justice sector. This represents an increase of 5.3% on last year.

Alcohol and cigarettes

The cost of a box of 20 cigarettes will rise by 50c (no surprises there!).

This will translate to the price of the most popular pack of cigarettes increasing to €15.

If you need a hand in claiming your entitlements on your tax return in Ireland, Taxback.com can help you get your tax refund in Ireland easily online! Get started here

The average Irish tax refund is €1,880

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