The standard income tax rates remain unchanged at 20% and 40%. Likewise the standard rate band (€33,800), along with the personal and PAYE tax credits (of €1,650 x 2) also remain unchanged. The following income tax changes were however introduced.
The earned income credit for the self-employed and proprietary directors (who do not receive the PAYE credit) has been increased from €550 to €950.
The home-carers tax credit, which is available to a spouse or civil partner working at home to care for a child or an elderly / incapacitated person, has been increased by €100 to €1,100.
A new €1,270 per annum tax credit has been introduced for fishers who spend at least 80 days a year fishing for wild fish.
The deduction for interest payments on funds borrowed to purchase, improve or repair residential rental property is being increased from 75% to 80%. It is proposed to restore 100% deductibility by way of 5% increments in the next 4 budgets.
An income tax rebate scheme is being introduced to assist first time buyers of new homes. The scheme consists of a rebate of income tax paid over the previous four years, subject to a ceiling of 5% of the purchase price of up to €400,000 (i.e. €20,000).This scheme will run until the end of 2019.
The ceiling for the exemption from income tax for income received from the letting of a room or rooms in a person’s principal private residence is being increased from €12,000 to €14,000 for 2017 and subsequent years.
The Living City Initiative, which provides tax relief over 7 to 10 years for qualifying work on residential and commercial properties in ‘special regeneration areas’, is being extended to landlords.
The Home Renovation Incentive Scheme, which provides an income tax credit of 13.5% on qualifying work costing a minimum of €4,405 per annum, has been extended to December 2018.
The Foreign Earnings Deduction (FED) allows a deduction of up to €35,000 when calculating the income tax (not PRSI or USC) payable by individuals required to spend the qualifying number of days working in certain specified countries. The qualifying number of days is being reduced from 40 to 30 from the start of 2017.
The rate of DIRT will be reduced from 41% to 39% in 2017, and will continue to be reduced by 2% p.a for the following 3 years until it reaches 33%.
Universal Social Charge (USC)
As widely anticipated, there has been a general 0.5% decrease in the universal social charge on incomes up to €70,000. Incomes of €13,000 or less are exempt; otherwise the revised USC rates and bands for 2017 are as follows:
| Income ||Employees ||Self Employed |
|€0 to €12,012 ||0.5% ||0.5% |
|€12,013 to €18,772 ||2.5% ||2.5% |
|€18,773 to €70,044 ||5.0% ||5.0% |
|€70,045 to €100,000 ||8.0% ||8.0% |
|Balance ||8.0% ||11.0% |
Medical card holders and individuals aged 70 years and over whose aggregate income does not exceed €60,000 will now pay a maximum USC rate of 2.5%.
The Minister announced the launch of a consultation process by the revenue Commissioners on the modernisation of the PAYE system.