In the 2026 Budget the Irish Government chose not to increase the income tax bands and credits and we calculate that decision has cost the average worker almost \u20ac1,200 a year. <\/p>\n\n\n\n
In 2025 the average full time earnings of employees was \u20ac62,000 according to the CSO. For a single person , claiming the usual tax and PRSI credits, that gave an income tax bill of \u20ac12,000, which in addition to USC (\u20ac1,406) and PRSI (\u20ac2,558) gives total deductions of \u20ac15,964, or 25.7% of gross income. <\/p>\n\n\n\n
The Budget actually included an increase in the PRSI rate, rising in stages from from 4.1% to 4.35%, offsetting a modest reduction in the USC, so the tax tables produced in the documentation showed a very marginal rise in the average tax rate for most people. However this takes no account of rising wages, and over the first half of the year average earnings are up by 3.7%. Taking this as the full year increase gives a 2026 average pay figure of \u20ac64,294.<\/p>\n\n\n\n
The additional income is taxed at a marginal rate of 40%, giving \u20ac918 , but the higher pay also means a rise in PRSI and USC, giving a total deduction of \u20ac17,152 or \u20ac1,188 more than in 2025. The average tax rate is now 26.7.<\/p>\n\n\n\n
The corollary is higher tax receipts for the Exchequer and income tax is running 7.7% up on last year, ahead of a Budget forecasts of 6.1%. It is now widely expected that the 2027 Budget will include at least a rise in the 20% tax band but unfortunately media headlines of thousands of euro for workers is misleading in the extreme, as a \u20ac1,000 increase in the band is only worth an additional \u20ac200. Its simply the case that in normal circumstances any tax change has a limited impact on average tax rates but doing nothing is costly for the average worker. <\/p>\n","protected":false},"excerpt":{"rendered":"
In the 2026 Budget the Irish Government chose not to increase the income tax bands and credits and we calculate that decision has cost the average worker almost \u20ac1,200 a year. In 2025 the average full time earnings of employees was \u20ac62,000 according to the CSO. For a single person , claiming the usual tax … Continue reading “Freezing tax bands added \u20ac1,200 to average workers tax bill this year”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20],"tags":[],"class_list":["post-485","post","type-post","status-publish","format-standard","hentry","category-irish-tax-sytem"],"_links":{"self":[{"href":"https:\/\/danmclaughlin.ie\/index.php?rest_route=\/wp\/v2\/posts\/485","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/danmclaughlin.ie\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/danmclaughlin.ie\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/danmclaughlin.ie\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/danmclaughlin.ie\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=485"}],"version-history":[{"count":1,"href":"https:\/\/danmclaughlin.ie\/index.php?rest_route=\/wp\/v2\/posts\/485\/revisions"}],"predecessor-version":[{"id":486,"href":"https:\/\/danmclaughlin.ie\/index.php?rest_route=\/wp\/v2\/posts\/485\/revisions\/486"}],"wp:attachment":[{"href":"https:\/\/danmclaughlin.ie\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=485"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/danmclaughlin.ie\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=485"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/danmclaughlin.ie\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=485"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}