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Budget 2023 measures are kicking in, from rent to childcare: here’s what it means for you

Wider income tax bands, a revived rent credit and welfare payment increases should bring some cheer for most people

Budget 2023: If you were renting last year, you can now claim your rent tax credit for 2022. Photograph: iStock

It may feel like a distant memory but thankfully, after a month of largesse, many of the changes signalled last September in Budget 2023 are set to take effect this month.

While the savings won’t be huge – it’s best to think maybe along the lines of that grocery slogan, “every little helps” perhaps – they will offer some relief to cash-strapped households amid the post-Christmas slump.

Income tax changes mean that a family with one earner, with income of €100,000, will save €75 a month. On the other hand a single person, earning €40,000 and benefiting from the new rent credit will save €111 a month, or a couple earning a combined €80,000 will save €222 a month. And there are other reliefs on the welfare front.

So what are the full changes that kick in this month?


Income taxes

The biggest relief is likely to come on the tax front. While there was no change to the tax rates announced last year – they’re still at 20 and 40 per cent – the level of earnings at which people start paying the top rate has been raised. It means that a single person can now pay tax at a rate of 20 per cent on an additional €3,200 of earnings, as the standard rate band has been moved up to €40,000 (€49,000 for married couples with one earner).

This will benefit those who are already paying tax at the higher rate the most, with the benefit applying to anyone earning more than €36,800. As our table shows, a single worker on €25,000 will only get to keep an additional €16 a month (€192 a year) in their pay cheque, while a worker on €40,000 will benefit to the tune of €69 a month (€828 a year).

Those on lower incomes will benefit from the increase in the 2 per cent universal social charge band, which is set to increase by €1,625 to €22,920. This will keep a worker on the minimum wage outside the higher rates of USC.

In addition, personal tax credits have been increased by €75 to €1,775. These include personal, PAYE and earned income credit.

Stay at home parents eligible for the home carer tax credit will also save a bit, as that credit is set to increase by €100 to €1,700.

Rent credit

If you were renting last year, you can now claim your rent tax credit for 2022. The tax credit, which was reintroduced in last year’s budget, is offered at a rate of 20 per cent of your annual rent, but a maximum does apply, of €500 per person (or €1,000 for a couple).

So someone paying €8,000 a year in rent will qualify for a credit of €500. The credit will apply for the years 2022 to 2025, so could result in total savings of up to €2,000.

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To claim this credit, you must file a tax return for 2022, which is relatively straightforward, and can be done via the Revenue’s MyAccount section if you’re a PAYE worker. The returns became available for submission from the start of this month. If you’re self-employed, you will be able to claim from January 24th.

As you can see from the table, qualifying for the rent credit will mean you get to keep about €42 extra a month away from the taxman; when combined with income tax changes it means an extra €111 or so a month for those earning in excess of €36,800.

Welfare changes

A raft of welfare payment hikes were signalled in Budget 2023. Many of these kicked in last year, including double payments for benefits such as children’s allowance, the state pension etc. However, the flat-rate increase of €12 a week to many payments applies from this month. This means that the full-rate state pension, for example, has increased to €265.30 a week, or €275.30 for someone aged 80 and over.

Other weekly increases of €12 apply to the widow’s/widower’s/surviving civil partner’s (contributory) pension/ the deserted wife’s benefit (payment for over 80s is €275.30); invalidity pension (225.50); disablement benefit (€251); jobseeker’s benefit (€220); maternity pay (€262); carer’s allowance (€236 under 66); farm assist (€220); and jobseeker’s allowance (€220 for those aged 25 and over).

The domiciliary care allowance will also increase this month, up by €20.50 from €309.50 to €330.

Other changes mean that families availing of the working family payment will be able to earn more while retaining their right to the payment: income limits will increase by €40 across all family sizes (up to €692 for a family with two children for example).

While those receiving child benefit got a double payment last October, there is no increase to this payment this year, and it will remain at €140 per child.

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Minimum wage

Since January 1st, the minimum wage has also increased, so those earning the minimum wage and paid on a monthly basis will get a bit of an uptick in their take-home pay at the end of the month.

The wage increased by 7.6 per cent from €10.50 an hour to €11.30 an hour. This means someone working a 39-hour week will earn €31.20 more a week, €120 more a month, and €1,600 a year.

The rates have also increased for those aged 19 (€10.17), 18 (€9.04) and under 18 (€7.91).

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Most of the changes on this front won’t kick in until later this year, although it’s worth noting that at a time of high inflation, the threshold under the Drugs Payment Scheme remains at €80 – so a saving on that front of sorts.

You’ll have to wait until April 1st to see the cost of hospital stays moderating but, from that date, public in-patient fees of €80 a day, up to a maximum of €800, will no longer apply.

At the same time, about 340,000 people should be eligible to qualify for a GP visit card, as the qualifying threshold will be lowered to household income of €46,000 or less.

Later on this year, the expansion of the free contraception scheme to women aged 16 and 26 to 30, and the provision of subsidised fertility services, will be rolled out.

Electricity credit

Homeowners and tenants alike will also get some welcome relief in the form of another electricity credit, which will be paid directly to accounts this month, with a further payment coming in March. Whether or not this month’s €200 payment does much to defray the swingeing cost of your upcoming electricity bill remains to be seen however.

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Childcare costs are also set to fall for some people after the decision to increase the hourly subsidy for the National Childcare Scheme from 50 cent to €1.40. The move means that parents of around 100,000 children could save as much as €1,200 to €2,100 a year.

Fuel allowance

While the one-off bumper payment of €400 was paid out last year, if you opted to receive the weekly payment in two instalments you will be due another payment this month, of €462. Moreover, a revision of the scheme means that as many as 81,000 more households will now qualify for the payment. This is because, from this month, a revised means test for the over-70s will apply for the payment.

Under the new method, a single person aged over 70 can have income of up to €500 a week, and a couple (where one person is over 70) €1,000 a week, and still qualify for the allowance.

The threshold for those aged under 70 has also been increased, up by €80 to €200 above the weekly rate of the state pension, which means total income of €465.30 a week.

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Public transport

Fares were cut in May 2022, and these will remain in place for 2023. This means that fares will cost you 20 per cent less until the end of the year. Moreover, there are further reductions for young adults, including a 50 per cent reduction on fares on the Leap card targeted at those aged between 19 and 23. The fares apply on a wide transport network across the State, including Dublin Bus, Bus Éireann, Irish Rail (including Dart) and the Luas.

Student registration fee

Typically levied at a rate of €3,000, this year the student contribution fee for undergraduate students who don’t have to pay full fees was cut by €1,000. So, if you paid €1,500 back in September, you will only have to pay €500 in the next payment for your offspring.