Minister for Finance statement on the introduction of Tax Credits for Overtime

The Minister states:

It is a general principle of taxation that, as far as possible, income from all sources should be subject to taxation.

Ireland has a progressive income tax system which is structured such that the more income you earn, the more tax you pay. As a person's income increases, they move up through the various rates and bands and, as a result, while the levels of take- home pay increase overall, the amount of tax they pay also increases.

However, to ease the burden facing average and middle-income earners, over successive Budgets the previous Government substantially increased the entry point to the higher rate of income tax for all earners by €8,700 or c. 25 per cent over the last four budgets. In addition, the main tax credits have also been increased by €350, or c. 21 per cent, over this period. Furthermore, in line with Government policy of ensuring full-time workers on the minimum wage remain outside the charge to the top rates of USC the ceiling of the 2 per cent USC rate band was increased by €6,898, or 34 per cent, from 2020 to 2025. Budgets 2024 and 2025 also cumulatively reduced the 4.5 per cent rate of USC to 3 per cent.

I have no current plans to introduce a tax credit for overtime. Tax credits and reliefs, no matter how worthwhile in themselves, reduce the tax base and make general reform of the tax system more difficult. While I receive numerous requests for the introduction of new tax reliefs and the extension of existing ones, I must be mindful of the public finances and the many demands on the Exchequer.