Tax Tips

Budget 2022 – How Will it Affect Me?

Irish Budget 2022

Our team of tax experts at Irish Tax Rebates have reviewed Budget 2022 in detail and have put together some insights on how it will affect you.

 

Who Does The Budget Affect?

Single Person, No Children
Single Parents
Married Couples
Pensioners

 

Single Person, No Children


Eric 

Occupation: Full-time Retail Worker

Annual Income: €21,000

Other: Studying Part-time Masters in UCD

 

As the Personal and Employee tax credits are each being increased by €50, there will be a saving of €100 per year.

Eric will also save €8 in 2022 as the USC rate band has increased to €21,295. This puts his income into a lower USC bracket at a rate of 2% as opposed to 4.5%.

His tuition fees for a part-time Masters in UCD amount to €7,000 for the 2022/2023 academic year. As it is part-time, the first €1,500 is not taken into consideration, so the balance of €5,500 will be allowable at 20%.

Eric’s total tax savings for the year will be €108.

 

 

Siobhán

Occupation: Full-time in a large multinational company

Annual Income: €45,000

Other: Works on a hybrid model (home and office)

 

Due to the rate band increasing from €35,300 to €36,800, Siobhán will have a tax saving of €300. As the Personal and Employee tax credits are being increased by €50 each, there will be a saving of €100 per year also.

As the USC income band has increased to €21,295 there is a saving here too of €15.20.

She also works from home for 180 days a year on a hybrid model, and the budget has now allowed her to claim 30% of light and heat bills. This will increase the amount that she can claim based on the number of days she worked at home. (This is based on average bills €1,800 Electricity, €1,200 gas and €500 broadband) €120 extra a year.

Total tax savings for the year will be €535

 

Single Parents

Jessica

Occupation: Retail Assistant

Annual Income: €27,000

Other: Medical Card Holder

Dependents: One child

 

Jessica is a single mother and holds a full medical card. Jessica earns €27,000 per annum working as a retail assistant and is entitled to claim the single parent child carer credit. As a result of Budget 2022, Jessica’s personal and employee tax credits have increased from €1,650 to €1,700 each.

Total tax savings for the year will be €100.

 

 

Mark

Occupation: Engineer 

Annual Income: €60,000

Dependent: One child (primary carer)

 

Budget 2022 has resulted in an increase in the income tax rate band for Mark, increasing from €39,300 to €40,800. Mark will have an income tax saving of €400. In addition to this, Mark will also benefit from the increase in the USC rate band which has been increased by €608, putting this portion of his income into the lower USC bracket at a rate of 2%. This has resulted in a saving in USC of €15.20. Mark is also entitled to claim a flat rate for his employment as an Engineer.

Total tax savings for the year will be €415.20.

 

Married Couples

Enrico & Deirdre

Occupation: Single Income (Enrico – Quantity Surveyor) 

Annual Income: €70,000

Dependents: One child

 

Enrico and Deirdre are a married couple with a single income. Enrico is a quantity surveyor while Deirdre is a full-time stay at home parent for their three-year-old daughter.

They are currently renting with the intention of buying a new house. The Help to Buy tax credit has been extended to the end of 2022 in Budget 2022. This is great news for Enrico and Deirdre, as it will help them buy their new home.

During the pandemic, Enrico had to work from home while Deirdre does not intend to return to work in the short term. His employer has agreed to a Hybrid work arrangement.

The standard rate tax band for a single income married couple has increased by €1,500 from €44,300 to €45,800 in Budget 2022 resulting in a tax saving of €300.

The increase of the Personal Tax Credit and the Employee Tax Credit by €50.00 will result in a tax saving of €150 for the couple.

The USC rate band has been increased by €608, putting a portion of Enrico’s income into the lower USC bracket at a rate of 2.0% as opposed to 4.5% This has resulted in a saving in USC of €15.20

The increase to 30% in the Work from Home allowance in relation to the cost of Light & Heat from a previous rate of 10% is welcome. Assuming Enrico works from home 2 days per week, the couple estimate that this will result in an additional tax saving of €120 per year.

Total tax savings for the year because of Budget 2022 will be €585.20.

 

 

Susan & Gráinne

Occupations: Retail Manager & Store Assistant

Annual Income: €44,000 & €30,000

Dependents: One teenage child

Other: Home-owners

 

Susan is a retail manager who earns €44,000 per year and Gráinne is a store assistant earning €30,000. Their only child is doing the Leaving Cert in 2022 and hopes to go to university in Dublin in September 2022.

The income tax rate band for a married couple with dual-income has been increased from €70,600 to €72,100. As a result, Susan and Gráinne will have an income tax saving of €300. Likewise, as the 2% USC income band has increased to €21,295, this will result in an additional USC saving of €15.20 each.

Both Susan and Gráinne will also benefit from the €50 increase in the Personal and Employee Tax Credit. This change will result in a tax saving of €100 each. The couple are also entitled to claim a flat rate for their employment in retail.

Total tax savings for the year will be €530.40.

 

Pensioners

Bridie & Arthur

Occupations: Mixed pensions, and a single part-time job

Annual Income: €22,500 and €8,500 (along with a combined state pension of €26,850)

 

Bridie and Arthur have been married for over 50 years and are jointly assessed. Bridie retired from the civil service a few years ago and is in receipt of the employment pension and the state pension. Arthur is in receipt of the state pension and works a few hours a week in a garden centre.

Due to the Budget, both their incomes increase by €5 each per week. Their state pension is now €13,425.40 each year. Bridie’s employment pension is €22,500 a year and Arthur earns €8,500 annually from the garden centre. Their Personal and Employee Tax Credit tax credits have increased by €50 each leaving them with a tax saving of €200. In 2022 they both will be turning 70 and Bridie will now enjoy the benefit of having the reduced rate of USC leaving her with a tax saving of €15.20 on her employer pension.

Total tax savings for the year will be €215

 

 

Agnes

Category: Widow, employed

Annual Income: €53,000

Dependents: 2 children

 

Agnes is employed and was recently widowed. She has two children; one is 13 and the other is 19.

As she is widowed, she is entitled to the Single Parent Tax credit. This will be of benefit to her as she will have to pay additional tax now due to her being in receipt of the Survivors Pension Contribution. The increased rate bands for Single Parents from €39,300 to €40,800 means she will get the benefit by an extra €300 per year. The Personal and Employee tax credits are being increased by €50 each, there will be a saving of €100 per year also.

As the USC income band has increased to €21,295 there is a saving here too of €15.20.

Total tax savings for the year will be €415.

 

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